Subjective Well-Being and Income: Is There Any Evidence of Satiation?
CAMA Working Paper 21/2013
26 Pages Posted: 16 May 2013 Last revised: 20 May 2013
Date Written: May 2013
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 well-being, happiness, satiation, basic needs, Easterlin paradox
JEL Classification: D6, I3, N3, O1, O4
Suggested Citation: Suggested Citation