Subjective well-being and income: analysis and evidence on easterlin paradox

Abstract

Many scholars have argued that increasing an average income did not raise an average subjective well-being, a claim that became known as Happiness Paradox , namely Easterlin Paradox. The present article has focused on the theoretical and practical aspects of the relationships of subjective well-being and income but a special focus is on the assessment of the validity of this claim in comparisons of both rich and poor countries, as well as over a short, medium and long period. Analyzing multiple datasets, multiple definitions of “basic needs” and multiple questions about well-being, we have not found any support for Easterlin Paradox over a short-term period. The relationship between well-being and income is roughly linear-log and does not diminish as incomes rise. However, higher income is no longer associated with higher subjective well-being over the long period.