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Subjective Well-Being and Income: Is There Any Evidence of Satiation?

  • Betsey Stevenson
  • Justin Wolfers

Many scholars have argued that once "basic needs" have been met, higher income is no longer associated with higher in subjective well-being. We assess the validity of this claim in comparisons of both rich and poor countries, and also of rich and poor people within a country. Analyzing multiple datasets, multiple definitions of "basic needs" and multiple questions about well-being, we find no support for this claim. The relationship between well-being and income is roughly linear-log and does not diminish as incomes rise. If there is a satiation point, we are yet to reach it.

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File URL: http://www.nber.org/papers/w18992.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18992.

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Date of creation: Apr 2013
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Publication status: published as Betsey Stevenson & Justin Wolfers, 2013. "Subjective Well-Being and Income: Is There Any Evidence of Satiation?," American Economic Review, American Economic Association, vol. 103(3), pages 598-604, May.
Handle: RePEc:nbr:nberwo:18992
Note: DEV EFG LE LS
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  1. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
  2. Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007. "Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," IZA Discussion Papers 2840, Institute for the Study of Labor (IZA).
  3. Daniel W. Sacks & Betsey Stevenson & Justin Wolfers, 2013. "The New Stylized Facts about Income and Subjective Well-Being," CESifo Working Paper Series 4067, CESifo Group Munich.
  4. Rafael Di Tella & Robert MacCulloch, 2008. "Happiness Adaptation to Income beyond "Basic Needs"," NBER Working Papers 14539, National Bureau of Economic Research, Inc.
  5. Oswald, Andrew J., 2008. "On the Curvature of the Reporting Function from Objective Reality to Subjective Feelings," IZA Discussion Papers 3344, Institute for the Study of Labor (IZA).
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