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The usefulness of a Happy Income Index

Author

Listed:
  • Prinz, Aloys
  • Bünger, Björn

Abstract

In this paper, Happy Income is introduced as an indicator of physical and socio-psychic wellbeing. It is constructed on the assumption that socio-economic well-being is based on objective circumstances, such as personal income as well as on a subjective evaluation of life. In combining these factors, Happy Income is a cardinal measure of overall well-being in a given country. Therefore, Happy Income is not subject to the limitations of purely ordinally scaled indicators, i.e. it is not restricted by an upper bound, which may be one explanation of the Easterlin paradox. The Happy Income concept is employed to measure social well-being in various different European countries. The results are compared to these countries' score on Ruut Veenhoven's Happy Life Years. It is argued that Happy Income is a valuable complement to other indicators of well-being at an aggregated level.

Suggested Citation

  • Prinz, Aloys & Bünger, Björn, 2011. "The usefulness of a Happy Income Index," CAWM Discussion Papers 15, University of Münster, Center of Applied Economic Research Münster (CAWM).
  • Handle: RePEc:zbw:cawmdp:15
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    References listed on IDEAS

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    1. Ingebjorg Kristoffersen, 2010. "The Metrics of Subjective Wellbeing: Cardinality, Neutrality and Additivity," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 98-123, March.
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    3. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, pages 95-144.
    4. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 89-109, May.
    5. Keeney,Ralph L. & Raiffa,Howard, 1993. "Decisions with Multiple Objectives," Cambridge Books, Cambridge University Press, number 9780521438834, December.
    6. Marc Fleurbaey & Guillaume Gaulier, 2009. "International Comparisons of Living Standards by Equivalent Incomes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 597-624, September.
    7. Decancq, Koen & Decoster, André & Schokkaert, Erik, 2009. "The Evolution of World Inequality in Well-being," World Development, Elsevier, vol. 37(1), pages 11-25, January.
    8. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, pages 95-144.
    9. Mentzakis, Emmanouil & Moro, Mirko, 2009. "The poor, the rich and the happy: Exploring the link between income and subjective well-being," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(1), pages 147-158, January.
    10. Stefan Boes & Rainer Winkelmann, 2006. "The Effect of Income on Positive and Negative Subjective Well-Being," SOI - Working Papers 0605, Socioeconomic Institute - University of Zurich.
    11. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    12. Caporale, Guglielmo Maria & Georgellis, Yannis & Tsitsianis, Nicholas & Yin, Ya Ping, 2009. "Income and happiness across Europe: Do reference values matter?," Journal of Economic Psychology, Elsevier, vol. 30(1), pages 42-51, February.
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    More about this item

    Keywords

    Happiness research; Happy Income; Happy Life Years; Subjective Well-being;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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