Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox
Open accessAbstract
The “Easterlin paradox” suggests that there is no link between a society’s economic development and its average level of happiness. We reassess 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 that between subjective 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.
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The evidence from the literature assessing the link between income and SWB is that this relationship is positive and modest.
“The evidence from the literature assessing the link between income and SWB is that this relationship is positive and modest (Stevenson and Wolfers, 2008), although there are some differences depending on what measure of SWB is used (Kahneman and Deaton, 2010), and whether other people's income is included in the assessment (Luttmer, 2005;Layard et al., 2010).”
From Measuring Subjective Wellbeing: Recommendations on Measures for use by National Governments (2012) · cites this paper as Stevenson and Wolfers, 2008
The relationship between income and evaluative well-being is best described as logarithmic.
“They also show that the relationship between income and evaluative well-being is best described as logarithmic (4, 10, 11).”
From Experienced well-being rises with income, even above $75,000 per year (2021) · cites this paper as [4]
People with larger incomes tend to report greater evaluative well-being.
“These studies show that people with larger incomes tend to report greater evaluative well-being (1–10).”
From Experienced well-being rises with income, even above $75,000 per year (2021) · cites this paper as [4]
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- Authors
- Stevenson, B., & Wolfers, J.
- Affiliations
- National Bureau of Economic Research (US)
- ORCID
- Wolfers, Justin
- Venue
- Brookings Papers on Economic Activity
- Publisher
- Project MUSE
- Published
- 2008-03
- Volume
- 2008
- Issue
- 1
- Pages
- 1-87
- ISSN
- 0007-2303 (ISSN-L)
- 1533-4465
- OpenAlex
- W4250943512
- Cited by
- 545
- References
- 44
- Citations by year
- 2026: 30 · 2025: 26 · 2024: 24 · 2023: 31 · 2022: 22 · 2021: 32 · 2020: 20 · 2019: 30 · 2018: 24 · 2017: 15 · 2016: 41 · 2015: 40 · 2014: 38 · 2013: 44 · 2012: 54
- FWCI
- 32.89
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- Brookings Papers on Economic Activity (publishedVersion)
- Topics
- Social Sciences › Psychology › Social Psychology › Psychological Well-being and Life Satisfaction
- Social Sciences › Sociology and Political Science › Quality of Life Measurement
- Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
- Keywords
- Easterlin paradox, subjective well-being, happiness, economic growth, GDP per capita, absolute income, relative income, satiation
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