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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.

That from Betsey Stevenson and Justin Wolfers.

One Response to “Is This a Problem for Utilitarian Redistribution Schemes?”

  1. Michael says:

    Although I don’t trust happiness studies, I see it as a problem. Just think about how happy we are, or at least being portayed by the media, now because the economy wasn’t growing as fast as we’d like. But I guess even when the economy was doing really well, it didn’t get any respect. I better stop here; with my answer of “on one hand but then on the other,” I’m beggining to sound like an economist!

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