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Income, Aspirations and Subjective Well-being: International Evidence

Author

Listed:
  • Hovi Matti
  • Laamanen Jani-Petri

    (Faculty of Management and Business, Tampere University)

Abstract

Previous micro-level results from cross-sectional data from individual countries sug- gest that well-being improvements related to rising incomes are at least partly offset by associated rises in income aspirations. We conduct a more encompassing analysis on the topic, covering about 30 countries in different stage of economic development. We use micro-data on Europeans’ subjective well-being, income and aspirations as measured by minimum income needs from the year 2013 and panel data on income and aspirations. Earlier findings on the negative role of income aspirations when it comes to well-being are shown to hold internationally. Moreover, in line with the earlier results from individual countries, we find that aspirations matter systematically more, the higher the country’s average income. These results are robust to three different measures of well-being. Fur- ther, the panel analysis shows that aspirations increase with incomes. Taken together, our results suggest that aspirations play an important role in holding back income-induced well-being improvements, especially in high-income countries.

Suggested Citation

  • Hovi Matti & Laamanen Jani-Petri, 2020. "Income, Aspirations and Subjective Well-being: International Evidence," Working Papers 2029, Tampere University, School of Management and Business, Economics.
  • Handle: RePEc:tam:wpaper:2029
    as

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    File URL: http://urn.fi/URN:ISBN:978-952-03-1595-5
    File Function: First version, 2020
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    References listed on IDEAS

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    More about this item

    Keywords

    Income; Subjective well-being; Aspirations;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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