The Happiness-Income Paradox Revisited

24 Pages Posted: 28 Jun 2011

See all articles by Richard A. Easterlin

Richard A. Easterlin

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

Laura Angelescu

University of Southern California - Department of Economics

Malgorzata Switek

University of Southern California

Onnicha Sawangfa

University of Southern California, Department of Economics

Jacqueline Zweig

affiliation not provided to SSRN

Abstract

The striking thing about the happiness-income paradox is that over the long-term – usually a period of 10 years or more – happiness does not increase as a country's income rises. Heretofore the evidence for this was limited to developed countries. This article presents evidence that the long term nil relationship between happiness and income holds also for a number of developing countries, the eastern European countries transitioning from socialism to capitalism, and an even wider sample of developed countries than previously studied. It also finds that in the short-term in all three groups of countries, happiness and income go together, i.e., happiness tends to fall in economic contractions and rise in expansions. Recent critiques of the paradox, claiming the time series relationship between happiness and income is positive, are the result either of a statistical artifact or a confusion of the short-term relationship with the long-term one.

Keywords: Easterlin Paradox, life satisfaction, subjective well-being

JEL Classification: I31, O10, O5, D60

Suggested Citation

Easterlin, Richard A. and Angelescu, Laura and Switek, Malgorzata and Sawangfa, Onnicha and Zweig, Jacqueline, The Happiness-Income Paradox Revisited. IZA Discussion Paper No. 5799. Available at SSRN: https://ssrn.com/abstract=1872747

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

Laura Angelescu

University of Southern California - Department of Economics ( email )

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

Malgorzata Switek

University of Southern California ( email )

Onnicha Sawangfa

University of Southern California, Department of Economics ( email )

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

Jacqueline Zweig

affiliation not provided to SSRN

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