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http://ssrn.com/abstract=1273524
 
 

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Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox


Betsey Stevenson


University of Michigan

Justin Wolfers


University of Michigan at Ann Arbor - Department of Economics; The Ford School of Public Policy, University of Michigan; The Brookings Institution; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

September 2008

CESifo Working Paper Series No. 2394

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.

Number of Pages in PDF File: 83

Keywords: happiness, subjective well-being, Easterlin Paradox, life satisfaction, economic growth, well-being-income gradient, hedonic treadmill

JEL Classification: D6, I3, J1

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Date posted: September 25, 2008  

Suggested Citation

Stevenson, Betsey and Wolfers, Justin, Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (September 2008). CESifo Working Paper Series No. 2394. Available at SSRN: http://ssrn.com/abstract=1273524

Contact Information

Betsey Stevenson (Contact Author)
University of Michigan ( email )
500 S. State Street
Ann Arbor, MI 48109
United States
Justin Wolfers
University of Michigan at Ann Arbor - Department of Economics ( email )
611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-764-2447 (Phone)
HOME PAGE: http://www.nber.org/~jwolfers
The Ford School of Public Policy, University of Michigan ( email )
735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States
734-615-6846 (Phone)
HOME PAGE: http://www.nber.org/~jwolfers
The Brookings Institution ( email )
1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
HOME PAGE: http://www.nber.org/~jwolfers
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://www.nber.org/~jwolfers
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=1737
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
HOME PAGE: http://www.cepr.org/researchers/details/rschcontact.asp?IDENT=157943
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
Kiel Institute for the World Economy ( email )
P.O. Box 4309
Kiel, D-24100
Germany
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