Working Paper: NBER ID: w18992
Authors: Betsey Stevenson; Justin Wolfers
Abstract: 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.
Keywords: Subjective Wellbeing; Income; Easterlin Paradox; Satiation
JEL Codes: D6; I3; N3; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| income (E25) | subjective wellbeing (I31) |
| income increase (D31) | subjective wellbeing increase (I31) |
| high income levels (D31) | wellbeing-income gradient remains strong (I31) |
| absence of satiation point (D10) | wellbeing-income relationship persists (I31) |
| wellbeing-income relationship among the poor (I32) | aligns with that of the rich (P17) |
| no satiation point (D11) | rejects weak and strong forms of modified Easterlin hypothesis (D11) |