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

See all articles by Betsey Stevenson

Betsey Stevenson

University of Michigan at Ann Arbor

Justin Wolfers

University of Michigan at Ann Arbor - Department of Economics; University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; The University of Sydney - Discipline of Economics; Brookings Institution - Economic Studies Program; Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

Multiple version iconThere are 4 versions of this paper

Date Written: May 2013

Abstract

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

Stevenson, Betsey and Wolfers, Justin, Subjective Well-Being and Income: Is There Any Evidence of Satiation? (May 2013). CAMA Working Paper 21/2013, Available at SSRN: https://ssrn.com/abstract=2265690 or http://dx.doi.org/10.2139/ssrn.2265690

Betsey Stevenson

University of Michigan at Ann Arbor ( email )

500 S. State Street
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Justin Wolfers (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

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