Economic growth and subjective well-being in developed countries

Abstract

The paper examines the Easterlin paradox, regarding long-term lack of correlation between the economic growth and subjective well-being of populations. The analysis covered 14 relatively developed European countries during the 2002-2012 period. The data coming from European Social Survey confirm the paradox, i.e. indicate the lack of correlation between economic growth and changes of the average subjective wellbeing of populations. The explanation of these results can be found in the relative income hypothesis, GDP's diminishing marginal utility, hedonic adaptation principle, and in the aspiration level theory. The results, among other things, support utilitarian idea of transition of developed societies policies' primary goals, from economic growth to rising of subjective well-being.