Are you slacking? Where do you and your country stand in the happiness pursuit?

This paper contributes to the literature on subjective well-being of individuals by estimating a “happiness frontier” under the premise that individuals seek to maximize happiness. The happiness frontier is defined as the pinnacle of happiness, given the resources and personal characteristics of individuals. However, individuals may not only strive to maximize their happiness but also to achieve higher levels of income, ceteris paribus. Thus, there is a trade-off between these two objectives, and the happiness�income frontier is attained when one can neither increase her happiness nor income, given her resources and personal characteristics. If one fails to attain the happiness-income frontier, there is a shortfall. The shortfall measures the rate at which both happiness and income for an individual, who has failed to attain the happiness frontier, could be increased given everything else. We also explore the determinants of this shortfall and conduct an empirical analysis using micro-level data gathered from the World Values Survey (WVS) for 74 countries. Our results suggest that age as well as certain personal circumstances, such as being unemployed or having a partner, have a strong influence on the levels the estimated well-being and income attainment measures. Likewise, we also find that the quality of the government of the country of residence also greatly affects individuals’ capacity to convert their resources into higher levels of happiness and income.