Our motivation: The Easterlin paradox, first coined in 1974, states that when countries reach a certain level of GDP, the relationship between income and happiness/well-being disappears. This is a persistent idea that takes on different forms in debates on economic growth, but when Stevenson and Wolfer revisit this paradox in their 2008 paper they find no evidence of such a satiation point. Instead, they show that economic growth is associated with rising happiness.
Abstract: The \"Easterlin paradox\" suggests that there is no link between a society's economic development and its average level of happiness. We re-assess this paradox analyzing multiple rich datasets spanning many decades. Using recent data on a broader array of countries, we establish a clear positive link between average levels of subjective well-being and GDP per capita across countries, and find no evidence of a satiation point beyond which wealthier countries have no further increases in subjective well-being. We show that the estimated relationship is consistent across many datasets and is similar to the relationship between subject well-being and income observed within countries. Finally, examining the relationship between changes in subjective well-being and income over time within countries we find economic growth associated with rising happiness. Together these findings indicate a clear role for absolute income and a more limited role for relative income comparisons in determining happiness.
Reference:
Stevenson, Betsey, och Justin Wolfers. 2008. ”Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox”. NBER Working Paper No. w14282
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