Happiness and Economic Growth: Does the Cross Section Predict Time Trends? Evidence from Developing Countries

INTERNATIONAL DIFFERENCES IN WELLBEING, Ed Diener, John F. Helliwell, and Daniel Kahneman, eds., Oxford University Press, Forthcoming

USC CLEO Research Paper No. C09-1

2 Pages Posted: 12 Mar 2009

See all articles by Richard A. Easterlin

Richard A. Easterlin

University of Southern California - Department of Economics; IZA Institute of Labor Economics

Onnicha Sawangfa

University of Southern California, Department of Economics

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Abstract

Based on point-of-time comparisons of happiness in richer and poorer countries, it is commonly asserted that economic growth will have a significant positive impact on happiness in poorer countries, if not richer. The time trends of subjective well-being (SWB) in 13 developing countries, however, are not significantly related to predictions derived from the cross sectional relation of happiness to GDP per capita. The point-of-time comparison leads to the expectation that the same absolute increase in GDP per capita will have a bigger impact on SWB in a poorer than a richer country. In fact there is no significant relation between actual trends in SWB and those predicted from the cross sectional relationship. Nor is a higher percentage rate of growth in GDP per capita significantly positively associated with a greater improvement in SWB. In the developing countries studied here a greater increase in happiness does not accompany more rapid economic growth. These conclusions hold true for two measures of SWB that are separately analyzed, overall life satisfaction and satisfaction with finances. The two SWB measures themselves, however, typically trend similarly within a country, providing mutually supporting evidence of the trend in well-being.

Suggested Citation

Easterlin, Richard A. and Sawangfa, Onnicha, Happiness and Economic Growth: Does the Cross Section Predict Time Trends? Evidence from Developing Countries. INTERNATIONAL DIFFERENCES IN WELLBEING, Ed Diener, John F. Helliwell, and Daniel Kahneman, eds., Oxford University Press, Forthcoming; USC CLEO Research Paper No. C09-1. Available at SSRN: https://ssrn.com/abstract=1356885

Richard A. Easterlin (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Onnicha Sawangfa

University of Southern California, Department of Economics ( email )

University Park
Los Angeles, CA 90089-0253
United States
213-740-2112 (Phone)

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