Abstract
In the paper, relation between GDP and subjective well-being, expressed as personal life satisfaction is analysed. On the basis of the European Union data from 2000 to 2009, the so-called Easterlin’s paradox, which claims that life satisfaction stays flat in face of the increasing wealth of nations, is tested. The test is carried out using aggregated country level data on life satisfaction from a Standard Eurobarometer survey and GDP per capita data. Both the cross-country correlation and the within-country trends’ regression analyses show that the GDP level is positively related to the level of life satisfaction. Although the relation is particularly strongly expressed in Eastern European countries, it also stays positive in many more prosperous EU countries. Nevertheless, further studies on factors influencing the shape of relation are necessary to explain exceptions from the relation. The authors also suggest a possible necessity to find more sensitive indicators of life satisfaction to measure it more accurately in the future.
Highlights
Individual utility, or subjective well-being, has been an object of economic studies for a long time
Both “very satisfied” and “fairly satisfied” answers are included into analysis. These results enable us to reject hypothesis H3 and claim that there is a significant positive relation between life satisfaction and GDP level
Findings of our study suggest that Easterlin’s paradox may be not valid, at least in some countries and/or for a certain period of time
Summary
Individual utility, or subjective well-being, has been an object of economic studies for a long time. The hypothesis is as follows: H2 – there is no significant positive relation between country’s GDP per capita level and country’s percentage of population saying they are very satisfied or fairly satisfied with their lives in the group of countries that have GDP per capita above 20000 EUR5 In testing both hypotheses, we employed the product moment (Pearson) correlation coefficient. This hypothesis will be tested further by using within-country data on time trends, we can state that, even after the country exceeds a certain level of wealth, the positive relation between life satisfaction and GDP remains These results are in contradiction with the findings from the World Value Survey as presented by Inglehart (2000) and raise a question about the validity of Fig. 2. Nine countries show no significant relation whichever life satisfaction indicator is used
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