Working Paper: CEPR ID: DP8048
Authors: Daniel W. Sacks; Betsey Stevenson; Justin Wolfers
Abstract: We explore the relationships between subjective well-being and income, as seen across individuals within a given country, between countries in a given year, and as a country grows through time. We show that richer individuals in a given country are more satisfied with their lives than are poorer individuals, and establish that this relationship is similar in most countries around the world. Turning to the relationship between countries, we show that average life satisfaction is higher in countries with greater GDP per capita. The magnitude of the satisfaction-income gradient is roughly the same whether we compare individuals or countries, suggesting that absolute income plays an important role in influencing well-being. Finally, studying changes in satisfaction over time, we find that as countries experience economic growth, their citizens? life satisfaction typically grows, and that those countries experiencing more rapid economic growth also tend to experience more rapid growth in life satisfaction. These results together suggest that measured subjective well-being grows hand in hand with material living standards.
Keywords: development; Easterlin Paradox; economic growth; hedonic treadmill; life satisfaction; quality of life; subjective wellbeing; wellbeing income gradient
JEL Codes: I31; I32; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| individual income (D31) | subjective wellbeing (I31) |
| GDP per capita (O49) | average life satisfaction (I31) |
| economic growth (O49) | life satisfaction of citizens (I31) |
| absolute income (D31) | subjective wellbeing (I31) |
| income level (D31) | life satisfaction (I31) |