Transcript Economic Growth and Happiness: Reassessing the Easterlin Paradox

Subjective Well-Being, Income, Economic
Development and Growth
Dan Sacks, Betsey Stevenson and Justin Wolfers
Wharton School, University of Pennsylvania and NBER
Annual Bank Conference on Development Economics--Stockholm, June 1 2010.
Implications of the Easterlin Paradox
 “Why do national comparisons among countries and over time
show an association between income and happiness which is
so much weaker than, if not inconsistent with, that shown by
within-country comparisons?” –Easterlin (1974)

Reference-dependent preferences
Relative income matters [Other people’s consumption matters]
Habit formation = hedonic treadmill [Other period’s consumption]
 Policy implications:


Growth: “My results, along with mounting evidence from other time
series studies of subjective well-being, do on balance undermine the
view that a focus on economic growth is in the best interests of
society.” –Easterlin (2005)
Public finance: If preferences are interdependent
⇒ Pigouvian rationale for taxing labor supply / conspicuous consumption
Sacks, Stevenson & Wolfers, Income and Happiness
2
Subjective Well-being
 “Subjective well-being refers to all of the various types of
evaluations, both positive and negative, that people make of their
lives. It includes reflective cognitive evaluations, such as life
satisfaction and work satisfaction, interest and engagement, and
affective reactions to life events, such as joy and sadness.” (Diener,
2005)
 Typical questions:



Happiness
“Taking all things together, would you say you are: very happy; quite happy;
not very happy; not at all happy.”
Life satisfaction
“All things considered, how satisfied are you with your life as a whole these
days?” [1=Dissatisfied – 10=Satisfied]
Satisfaction ladder:
“Here is a ladder representing the ‘ladder of life’. Let's suppose the top of the
ladder represents the best possible life for you, and the bottom, the worse
possible life for you. On which step of the ladder do you feel you personally
stand at the present time? [0-10 steps].”
Sacks, Stevenson & Wolfers, Income and Happiness
3
Research Question: What is the Relationship Between
Subjective Well-being and Income?
Types of comparisons
1970s view
“Easterlin Paradox”
Within country:
Rich v. poor people in a
country
Big effects
Between country:
Rich v. poor countries
National time series:
Country when rich v. poor
International panel:
Countries with fast v. slow
growth
Implications
Policy conclusions
Statistically
insignificant effects
interpreted to be zero
No effects
(Japan, USA, Europe)
Largely unexamined
1990s view
“Satiation”
New view:
Stevenson-Wolfers findings
results,
along with mounting
Big“My
effects
for income
Strong effects:
<$15k from other time series
βwithin≈0.35
evidence
- But not for the rich
studies of subjective well-being, do on
GDP<$15k:
Strong
effects
balance
undermine the view
that
a
Strong effects
βbetween=0.35
focus onNoeconomic
growth is in the
GDP>$15k:
effects
best
interests of society.” Strong effects
No effects
– Richard Easterlin (2005)
(Available data are for
rich countries)
Largely unexamined
Relative income
determines wellbeing
Relative income
determines wellbeing… once “basic
needs” are met”
De-emphasize
growth
Rich countries should
de-emphasize growth
and tax labor supply
Sacks, Stevenson & Wolfers, Income and Happiness
βtime series=0.35
Strong effects
βpanel=0.35
There’s no paradox
(and never was)
4
Research Question: What is the Relationship Between
Subjective Well-being and Income?
Types of comparisons
1970s view
“Easterlin Paradox”
1990s view
“Satiation”
Within country:
Rich v. poor people in a
country
Big effects
Big effects for income
<$15k
- But not for the rich
Between country:
Rich v. poor countries
National time series:
Country when rich v. poor
International panel:
Countries with fast v. slow
growth
Implications
Policy conclusions
Statistically
insignificant effects
interpreted to be zero
GDP<$15k:
Strong effects
GDP>$15k: No effects
No effects
(Japan, USA, Europe)
No effects
(Available data are for
rich countries)
Relative income
determines wellbeing
Relative income
determines wellbeing… once “basic
needs” are met”
De-emphasize
growth
Rich countries should
de-emphasize growth
and tax labor supply
Largely unexamined
Largely unexamined
New view:
Stevenson-Wolfers findings
effects:
“once Strong
a country
has over
within
≈0.35
β
$15,000 per head, its
level of happiness
Strong effects
appears
to be
=0.35
βbetween
independent of its
income”
Strong effects
series=0.35
– Richard
(2003)
βtimeLayard
Sacks, Stevenson & Wolfers, Income and Happiness
Strong effects
βpanel=0.35
There’s no paradox
(and never was)
5
Research Question: What is the Relationship Between
Subjective Well-being and Income?
Types of comparisons
1970s view
“Easterlin Paradox”
1990s view
“Satiation”
New view:
Stevenson-Wolfers
Within country:
Rich v. poor people in a
country
Big effects
Big effects for income
<$15k
- But not for the rich
Strong effects:
βwithin≈0.35
No effects
(Japan, USA, Europe)
No effects
(Available data are for
rich countries)
Strong effects
βtime series≈0.35
Relative income
determines wellbeing
Relative income
determines wellbeing… once “basic
needs” are met”
There’s no paradox
(and never was)
De-emphasize
growth
Rich countries should
de-emphasize growth
and tax labor supply
Between country:
Rich v. poor countries
National time series:
Country when rich v. poor
International panel:
Countries with fast v. slow
growth
Implications
Policy conclusions
Statistically
insignificant effects
interpreted to be zero
Largely unexamined
GDP<$15k:
Strong effects
GDP>$15k: No effects
Largely unexamined
Sacks, Stevenson & Wolfers, Income and Happiness
Strong effects
βbetween≈0.35
Strong effects
βpanel≈0.35
6
Why revisit the stylized facts?
1.
2.
Theoretical implications: Reference-dependent preferences
Yielding important policy implications (and big policy claims)
What explains our new findings?
1.
2.
3.
New data:

Longer time series (1946-2010);

More countries (n=140)
Statistical inference: Absence of evidence v. evidence of absence
What are “big” versus small effects? ⇒ Focus on the magnitudes
What we won’t do


Assess causality: Happiness = β log(Income)
Revisit what subjective well-being data “mean”
Sacks, Stevenson & Wolfers, Income and Happiness
7
Outline: Assessing the Happiness-Income link

Within-country cross-sectional comparisons



Between countries:





In past and current data
Multiple datasets
For both happiness and life satisfaction
No evidence of satiation
National Time Series and International Panels





USA
All countries
Japan
Europe
World Values Survey
USA
Newly-available measures of subjective well-being
Sacks, Stevenson & Wolfers, Income and Happiness
8
Within-Country Comparisons: USA
“Taken all together, how would you say things are these days?”
Family income
Very happy
Pretty happy
Not too happy
<$12,500 (bottom 10%)
21%
53%
26%
≥$150,000 (top 10%)
53%
45%
2%
$12,500-$49,999
$50,000-$149,999
25%
40%
Source: U.S. General Social Survey, 2006
61%
54%
13%
6%
“When we plot average happiness versus income for clusters of people in a given
country at a given time, we see that rich people are in fact much happier than poor
people. It’s actually an astonishingly large difference. There’s no one single change
you can imagine that would make your life improve on the happiness scale as much
as to move from the bottom 5 percent on the income scale to the top 5 percent.”
- Robert Frank (2005)
Sacks, Stevenson & Wolfers, Income and Happiness
9
Satisfaction and Log(Family Income)
Well-Being
Lowess and
fits forLog(Income)
the 25 Largest Countries; Gallup World Poll
8
USA
βwithin
7
MEX
≈ 0.35
ITAFRA
DEU
COL
BRA
IND THA
VNMTUR
IRN
RUS
PAK
UKR
CHN
EGY
PHL
BGDNGA
6
5
JPN
KOR
.5
0
ETH
-.5
4
3
-1
Figure shows the central 90% of the income distribution for each country.
.5
64
32
8
16
4
1
2
Annual household income ($000s; Log income scale)
Normalized satisfaction ladder score
Satisfaction ladder score (0-10)
1
GBR
128
Source: Daniel Sacks, Betsey Stevenson and Justin Wolfers (2010), “Subjective Well-Being, Income,
10
Sa
cks
Within-country : Rich are happier than poor
Permanent
Income
Adjusted
0.422
IV
Sample size
0.449 ***
(0.027)
171,900
(126
Countries)
116,527
(61
Countries)
32,463
(43
Countries)
Without
controls
With
controls
Gallup World Poll:
Ladder question
0.236***
(0.014)
0.232***
(0.014)
World Values Survey:
Life satisfaction
0.216***
(0.017)
0.227***
(0.037)
0.413
0.26***
(0.035)
Pew Global Attitudes
Survey: Ladder
question
0.281***
(0.027)
0.283***
(0.027)
0.515
0.393***
(0.033)
Notes: The table reports the coefficient on the log of household income, obtained from regressing standardized
life satisfaction against the log of household income and country fixed effects using the indicated data set.
Additional controls include a quartic in age, interacted with sex, plus indicators for age and sex missing. Our
permanent income adjustment is to scale up our estimates by 1/0.55; see text for explanation. We instrument for
income using full set of country×education fixed effects. We report robust standard errors, clustered at the country
level, in parentheses. For further details on the standardization of satisfaction and the exact wording of
satisfaction question, see the text. ***, ** and * denote statistically significant at 1%, 5% and 10%, respectively.
Sacks, Stevenson & Wolfers, Income and Happiness
11
Outline: Assessing the Happiness-Income link
 Within-country comparisons


USA
All countries
 Between countries:




βwithin ≈ 0.35
In past and current data
Multiple datasets
Both happiness and life satisfaction
No evidence of satiation
“the happiness differences between rich
and poor countries that one might
expect on the basis of the within country
differences by economic status are not
borne out by the international data.” –
Easterlin, (1974)
 National Time Series and International Panels




Japan
Europe
World Values Survey
USA
Sacks, Stevenson & Wolfers, Income and Happiness
12
Sacks, Stevenson & Wolfers, Income and Happiness
World Values Survey
1.0
DNK
ISL
SWE
MLTIRL AUS
NOR
CAN
NLD
USA
GBR
BEL
DEU
HUN
FRA
ITA
ESPJPN
8
7
0.5
8
7
6
KOR
5
-0.5
ARG
4
y = -4.07+0.46*ln(x) [se=0.22]
Correlation=0.57
3
.5
1
9
8
2
4
8
16
6
5
4
-1.5
3
COL
PRI CHE
FIN
SWE
NZL
USA
0.5
NOR
GBR
AUS
2
4
8
16
32
NGA
y = -4.69+0.51*ln(x) [se=0.08]
Correlation=0.74
1
7
6
5
4
-1.5
3
16
8
-1.5
32
1.0
PRI
DNK
MEX MLT IRL
ISL LUX
AUT
NLD
FIN
CAN
USA 0.5
SWE
BEL
VEN
DEU
GBR
ARG
SAU
SVN
ITA
CHL CZE
SGP
ESP
ISR
PRT
IDN
FRA
NGA
GRC
PHL
VNM CHN
KGZ
JPN
HRV
PER
0.0
IRN POL KOR
MAR
SVK
EST
BGD
DZA
SCGBIHJOR
TURZAFHUN
UGA
BGR
LVA
IRQ
-0.5
ALBROM
IND
MKD
LTU
PAK EGY
BLR
RUS
MDA
UKR
8
-1.0
4
2
1999-2004 wave
9
0.0
-0.5
CHN
IND
-1.0
.5
1.0
y = -4.00+0.43*ln(x) [se=0.05]
Correlation=0.72
1
4
1994-99 wave
3
.5
-1.0
32
SLV MEX
BRA
URY
DEU
CHNPHL VEN
ESPJPN
NGA
TWN
IND
SVN
PERTUR POL CZE
HRV
SVK
HUN
MKD
SCG
ZAF
BIH
AZE
EST
LTU
LVA
ROM
BGD
CHL
ARG
GEO ALB DOM
BGR
RUS
BLR
ARM
UKR
MDA
7
5
1.0
CHE
MLT DNK
ISL
CAN
IRL SWE
AUT
USA0.5
NLD
NOR
FIN
BEL
GBR
BRA
ITA
ESP
PRT
DEU
KOR
SVKCZE FRA
POL
JPN 0.0
TUR
SVN
HUN
LTU
ROM EST
LVA
BLR RUS
-0.5
BGR
ZAF
CHLMEX
ARG
0.0
6
Satisfaction ladder score (0-10)
1989-93 wave
9
-1.0
ZWE
TZA
y = -2.88+0.32*ln(x) [se=0.04]
Correlation=0.72
.5
1
2
4
Standardized satisfaction ladder score
1981-84 wave
9
βbetween ≈ 0.35
8
Real GDP per&Capita
(thousands
of dollars,
scale)
Sacks, Stevenson
Wolfers,
Income
andlog
Happiness
16
-1.5
32
14
Pew Global Attitudes Survey, 2002
9
1.5
8
1.0
Satisfaction ladder score (0-10)
GTM
7
HND
VNM
EGY
KOR
VEN
BRA
6
UZB
NGA
IDN
BOL
CIV
SEN
PAK
5
KEN
MLI
IND
CANUSA
MEX
PER
PHL
JOR
CHN
LBN
ARG
CZE
ITA
FRA
GBR
DEU
0.5
JPN
SVK
POL
ZAF
0.0
UKR TURRUS
BGDGHA
-0.5
4
UGA AGO
TZA
BGR
y = -1.73+0.20*ln(x) [se=0.04]
Correlation=0.55
3
.5
Standardized satisfaction ladder score
βbetween ≈ 0.35
1
2
4
8
Real GDP per capita (thousands of dollars, log scale)
16
Sacks, Stevenson & Wolfers, Income and Happiness
-1.0
32
15
Gallup World Poll
Satisfaction ladder score (0-10)
8
7
6
5
4
1.5
βbetween ≈ 0.35
DNK
FIN
CHE
NLD
NOR
NZL CAN
SWE
IRL
USA
AUS
CRI
BEL
ESPAUT
SAU
ISR GBR
VEN
FRA ARE
ITA
SGP
MEX
PRI
PAN
BRA
CZE DEU
GRC
CYP
JAM
ARG
TWN
MYS
GTM
COL
KWT JPN
JOR
LTU
THA CHL
TTO SVN
HRV
URY
POL
BLR
KAZ
KOR
HKG
BOL
SLV
CUB
PRT
VNM
EST
MMRUZB
RUS SVK
IRN
PAK HND
LAO
ROM
MNE
DOM
TUR
INDEGY
ZAF
UNK
BWA HUN
DZA
UKR
MAR
PER
ECU
PRY
IDN
MDA
LBN
GHA
BIH
NGA
LVA
PHL SRB
CHN
MOZ
NIC
KGZ
MRT
NPL
AZE
BGD
SEN
ALB
IRQ
ARMMKD
ZMB TJK
YEM
AGO
LKA
MWIMDG
MLI UGA
RWA
CMR
KEN
NER BEN
ETH
AFGTZA
BFA
BDI
KHMGEO
BGR
TCD
HTI
0.5
0.0
-0.5
ZWE
SLE
TGO
y=-2.955+0.342*ln(x) [se=0.019] -1.0
Correlation=0.82
3
0.5
1.0
Standardized satisfaction ladder score
9
1
2
4
8
16
GDP per capita,
(thousands
of dollars,
scale)
Sacks,Real
Stevenson
& Wolfers,
Income
andlog
Happiness
32
16
Between Countries: Rich Countries Are Happier
Estimates of βbetween
βbetween
≈ 0.35
Microdata
National Data
Gallup World Poll: Ladder
question
World Values Survey:
Life satisfaction
Without
controls
0.357***
(0.019)
0.360***
(0.034)
With
controls
0.378***
(0.019)
0.364***
(0.034)
0.342***
(0.019)
0.370***
(0.036)
Sample size
291,383
(131 countries)
234,093
(79 countries)
Pew Global Attitudes
Survey: Ladder question
0.214***
(0.039)
0.231***
(0.038)
0.204***
(0.037)
37,974
(44 countries)
Notes: This table reports the coefficient on the log of per capita GDP, obtained from regressing standardized life
satisfaction against the log of GDP, using individual data with and without controls, and using national-level data
without controls, in the indicated data set. In the national-level regressions, we take the within-country average of
standardized life satisfaction as the dependent variable. GDP per capita is at purchasing power parity. The
additional controls include a quartic in age, interacted with sex, plus indicators for age and sex missing. We report
robust standard errors, clustered at the country level, in parentheses. For further details on the standardization of
satisfaction, the exact wording of satisfaction question, and the sources for GDP per capita, see the text. ***, ** and *
denote statistically significant at 1%, 5% and 10%, respectively.
Sacks, Stevenson & Wolfers, Income and Happiness
17
Comparing Within and Between Country Estimates
9
Country-year aggregates
1.5
Within-country wellbeing gradient
1.0
0.5
0.0
-0.5
8
DNK
FIN
CHE
NLD
NZLCAN
NOR
SWE
IRL
USA
AUS
CRI
BEL
ESPAUT
SAU
ISR GBR
VEN
FRA ARE
ITA
SGP
MEX
PRI
PAN
BRA
CZE DEU
GRC
CYP
JAM
ARG
TWN
MYS
GTM
COL
KWT JPN
JOR THA CHLLTU
TTO SVN
HRV
URY
POL
BLR
KAZ
KOR HKG
BOL
SLV
CUB
PRT
VNM
EST
MMR
UZB
RUS SVK
IRN
PAK HND
ROM
LAO
MNE
DOM
TUR
INDEGY DZA
UNK
BWA HUN
UKR ZAF
MAR
PER
ECU
PRY
IDN
MDA
LBN
GHA
BIH
NGA
LVA
PHL
SRB
CHN
MOZ
NIC
KGZ
MRT
NPL
SEN
BGD
AZE
ALB
ARM
ZMB TJK
YEM
AGO
LKA MKD
MWIMDG
MLI UGA
RWA
CMR
KEN
NER
ETH
AFG
TZA BEN
BFA
BDI
KHMGEO
BGR
TCD
HTI
βbetween
-1.0
≈
βwithin
≈ 0.35
ZWE
SLE
1
2
6
5
4
3
TGO
.5
7
Satisfaction ladder score (0-10)
Standardized satisfaction ladder score
Between-country wellbeing gradient
4
8
16
Real GDP per capita (thousands of dollars, log scale)
Sacks, Stevenson & Wolfers, Income and Happiness
32
18
Are There Satiation Effects?
 There exists no
income level above
which further income
does not raise happiness
1.5
Standardized Happiness Index
 There exists no
dataset in which the
well-being-income
gradient changes at
incomes above $15,000
Happiness and Family Income in the U.S.
1.0
0.5
0.0
-0.5
-1.0
-1.5
Bottom half: Slope=0.24 (0.10)
Inc<15k: Slope=0.31 (0.49)
4
8
16
Top half: Slope=0.30 (0.07)
Inc>$15k: Slope=0.26 (0.05)
32
64
128
Family Income ($000s)
Source: Gallup Poll, December 2007
256
512
Source: Betsey Stevenson and Justin Wolfers (2010), “Subjective Well-being and Income: Is
Stevenson and Wolfers, Subjective Well-Being
19
There Any Evidence of Satiation?”
Outline: Assessing the Happiness-Income link
 Within-country comparisons


USA
All countries
 Between countries:




βwithin ≈ 0.35
Through time
Multiple datasets
Both happiness and life satisfaction
No evidence of satiation
βbetween ≈ 0.35
 National Time Series and International Panels




Japan
Europe
World Values Survey
USA
“income growth in a society does not increase
happiness”. - Easterlin (1995)
Sacks, Stevenson & Wolfers, Income and Happiness
20
Happiness & Economic Growth: Time Series Evidence
 Japan


Old view: Life satisfaction flat, despite robust post-war growth
New view: Robust growth in life satisfaction
…apparent only when taking account of breaks in the data
 US


Old view: No increase in happiness since 1972 despite GDP growth
New view: True.
…but few sample participants experienced income growth
 Europe


Old view: No clear evidence of growing life satisfaction (1973-89)
New view: Extending data through 2007 yields clearly rising satisfaction
 Around the World


Old view: No clear evidence of growing life satisfaction
New view: Clear positive relationship between income and growth
… when comparing comparable samples
and Wolfers, Subjective Well-Being
Source: Betsey StevensonStevenson
and Justin Wolfers
(2010), “Time Series Evidence on the Well-Being Link” 21
Time Series: No rise in happiness, despite growth
Japan
U.S.A
Europe
Life in Nation Surveys
General Social Survey
Eurobarometer
Sacks, Stevenson & Wolfers, Income and Happiness
22
of Subjective
Well-Being and GDP in Japan
Japan: Evolution
Well-Being
versus GDP
Pattern of responses from four different questions
Well-being: Ordered Probit Index
0.3
0.2
0.1
Overall, to what
degree are you
satisfied with
your life now:
1995(5)
-Satisfied
-Somewhat
satisfied
1993(5)
1996(7)
1985(5)
-Somewhat
1992(5)
dissatisfied
1979(5)
-Dissatisfied
1986(5) 1990(5)
1997(5)
1991(5)
1977(5)
2006(10)
1994(5)
1970(1)
1982(5)
1968(1)
1984(5)1988(5)
1983(5)
1987(5)
1973(1)
1978(5)
1969(1)
1999(12)
1981(5)
1980(5)
1989(5)
2007(7)
1964(1)
1976(5)
1967(2)
2001(9)
1975(5)
1965(1)
2002(6)
1976(11)
1972(1)
2005(6)
2004(6)
1966(1)
1971(1)
1975(11)
2003(6)
How do you feel about
your circumstances at home:
1963(1)
-Satisfied
-Not1959(1)
satisfied, not dissatisfied
-Somewhat dissatisfied
-Extremely dissatisfied
1962(1)
1961(1)
1960(1)
1958(2)
0.0
-0.1
How do you feel about
your life at home:
-Completely satisfied
-Satisfied
-Somewhat dissatisfied
-Completely dissatisfied
How do you feel about
your life now:
-Completely satisfied
-Satisfied
-Somewhat dissatisfied
-Completely dissatisfied
-0.2
1974(1)
-0.3
Slope=0.19
[se=0.13]
2000
Slope=0.16
[se=0.08]
Slope=0.18
1974(11)
[se=0.07]
16000
4000
8000
Real Japanese GDP per Capita, PPP (log scale); 2000 US$
Source: Life-in-nation surveys, 1958-2007.
time
series
Stevenson and Wolfers, Subjective Well-Being
β
≈ 0.35
Slope=-1.14
[se=0.51]
32000
23
.9%
Economic Conditions
4.1%
6.0
$16k
5.0
$8k
$4k
4.0
12.8%
3.0
10.5%
$2k
2.0
$1k
1.0
Real GDP per capita
$.5k
Subjective Well-Being: Ordered Probit Index
Unemployment Rate (%)
Real Japanese GDP per capita
PPP (Log scale)
Japan:
Raw data
$32k
Japan: 1958-2007
1960
1970
GDP trend
1980
Unemployment rate (right axis)
1990
2000
2010
Subjective Well-Being
1
0.0
1
.75
.75
.5
.5
.25
.25
0
0
Raw series,
with breaks
-.25
-.25
-.5
-.5
1960
1990Well-Being 2000
1970
1980 Subjective
Stevenson
and Wolfers,
2010
24
Income and Happiness Trends in the U.S.
Happiness:
Ordered Probit Index
USA:
happiness
0.2 Is it surprising that
Average
Happiness hasn’t grown?
0.1
0.0
-0.1
-0.2
Change since 1972 in
log(average income)
1970
1980
1985
1990
1995
2000
2005
Measures of Log(Average Income)
0.8
0.6
0.4
0.2
Average
household
income [GSS]
0.0
-0.2
1970
Change since 1972 in
average log(income)
1975
1975
1980
1985
1990
1995
2000
2010
GDP per
capita
Average
household
income [CPS]
2005
2010
Measures of Average Log(Income)
0.8
Happinesst = 0.048 * Average log household income in GSSt [95% ci: -0.25 - +0.34]
Happinesst = 0.058 * Average log household income in CPSt [95% ci: -0.21 – 0.33]
0.6
0.4
0.2
Average
log(household
income) [GSS]
0.0
-0.2
1970
2000
1990
1980
1975
Sacks,
Stevenson
& 1985
Wolfers, Income
and1995
Happiness
Average
log(household
income) [CPS]
2005
2010
25
Change in Life Satisfaction and Economic Growth in Europe
0.50
Belgium
Denmark
Greece
0.25
0.00
-0.25
Life Satisfaction, 0-10 Scale
-0.50
0.50
y = 2.53 + -0.25 * log(GDP) [se=0.14]
Correlation = -0.31
y = -3.63 + 0.36 * log(GDP) [se=0.05]
Correlation = 0.73
France
y = -2.05 + 0.21 * log(GDP) [se=0.10]
Correlation = 0.22
Ireland
Italy
0.25
0.00
-0.25
y = -3.91 + 0.39 * log(GDP) [se=0.10]
Correlation = 0.63
-0.50
0.50
y = -0.90 + 0.09 * log(GDP) [se=0.05]
Correlation = 0.30
Netherlands
y = -6.75 + 0.68 * log(GDP) [se=0.09]
Correlation = 0.81
United Kingdom
West Germany
0.25
0.00
-0.25
-0.50
8
time
series
β
y = -1.88 + 0.19 * log(GDP) [se=0.07]
Correlation = 0.41
≈ 0.35
16
32
y = -1.34 + 0.13 * log(GDP) [se=0.03]
Correlation = 0.48
8
16
32
y = -1.08 + 0.11 * log(GDP) [se=0.08]
Correlation = 0.19
8
Stevenson and Wolfers, Subjective Well-Being
Real GDP per capita (thousands of dollars, log scale)
16
32
26
Change in Life Satisfaction & Economic Growth: World Values Survey
Changes between waves I and II
Changes between waves II and III
Changes between waves III and IV
Ch. Sat.=-0.14+0.71*Ch. GDP [se=0.15]
Ch. Sat.=-0.15+0.60*Ch. GDP [se=0.11]
Ch. Sat.=0.05+0.51*Ch. GDP [se=0.25]
0.75
KOR
0.50
ITA
ESP
BEL MLT
FRA
USA
IRL
NLD
CAN
ARG ISL
SWEJPN
DNK
GBR
NOR
DEU
Cumulative change in life satisfaction (z-scale)
0.25
0.00
BGR
JPN
SVN
FIN GBR
ARG
DEUNOR
USA
POL
HUN
SWE
TUR
BRA
CHE
CZE
-0.25
LVA
RUS EST
LTU
BLR
HUN
-0.50
-50
0.75
0
50
100 -50
0
EST
MDA
VEN
SVN
BGR
CZE MEX
UKR
DEU
BLR
ESP
ALB
PRI
LVA
ROM
BIH
RUS
HRV
ZAF
LTUFIN
PER
USA
SCG
SVK
POL
SWE
HUN
PHL
GBR
JPN
CHL
ESP
SVK
TUR
MKD
ROM
50
100 -50
0
50
100
Changes between waves I and III
Changes between waves II and IV
Changes between waves I and IV
Ch. Sat.=-0.22+0.42*Ch. GDP [se=0.27]
Ch. Sat.=-0.09 +0.29*Ch. GDP [se=0.12]
Ch. Sat.=-0.11 +0.23*Ch. GDP [se=0.08]
0.50
SVN
KOR Offscale
(215, 0.35)
0.25
DEU
BGR CZE
AUT
FIN
FRA
NLD
ISLDNK
ESTJPN
GBR
CAN
BEL
PRT
ESPMLT
USA
ITA
POL
SWE
HUN
LVA
SVK
RUS
BLRROM
TUR
LTU
JPN
ESPGBR
ARG USA
SWEDEU
NOR
AUS
0.00
-0.25
ITA
ESP
FRA
DEU
BEL
NLD
DNK
USA
ISL CAN
JPN
GBR
SWE
IRL
KOR
MLT
IRL
HUN
-0.50
-50
time
series
β
HUN
≈ 0.35
0
50
100 -50
0
50
100
0
Stevenson & Wolfers, Economic Growth and Happiness
Cumulative change in real GDP per capita (percent)
50
100
150
27
International Panel Data: World Values Survey
Normalized satisfaction, relative to country and wave fixed effects
0.4
βpanel ≈ 0.35
0.2
0.0
-0.2
y = 0.51*ln(x) [se=0.12]
Correlation=0.55
-0.4
-.5
-.25
0
.25
Sacks, Stevenson
& Wolfers,
and
Happiness
Log GDP,
relative to Income
country and
wave
fixed effects
.5
28
Satisfaction and Growth: International Panel Regressions
Panel A: Panel Regressions
0.505***
(0.109)
166 observations
79 countries
ln(GDP)
N
0.638**
(0.239)
31 observations
10 countries
0.407***
(0.116)
135 observations
66 countries
0.170**
(0.074)
776 observations
31 countries
0.350**
(0.163)
46 differences
0.278*
(0.164)
30 differences
Panel B: Long differences
0.470***
(0.128)
66 differences
ln(GDP)
N
0.694*
(0.387)
10 differences
βpanel ≈ 0.35
Sacks, Stevenson & Wolfers, Income and Happiness
29
-.2
0
.2
βpanel ≈ 0.35
y = 0.17*ln(x) [se=0.05]
Correlation=0.15
-.4
Normalized satisfaction, relative to country and wave fixed effects
.4
International Panel Data: Eurobarometer
-.4
-.2
0
.2
Sacks, Stevenson
& Wolfers, Income
and Happiness
log GDP, relative to country and wave mean
.430
Change in satisfaction, relative to country and wave fixed effects
Long Differences: World Values Survey
βpanel ≈ 0.35
0.4
SVN
KOR
KOR Offscale
(1, 0.33)
MDA
VEN
0.2
ITA
CZE
BGR
ESP
MEX
AUT
FIN
UKR
IRL
FRA
MLT
DEU
BEL
CHE
NLD
BIH
HRV
DNK
EST
0.0
ISL
BRA
ZAF
CAN
AUS
PER
SCG
ALB PRI
PRT
NOR
USA
POL
JPN
GBR
LVA
SWE
-0.2
PHL
SVK
ROM
RUS
BLR
TUR
LTU
MKD
-0.4
HUN
-0.6
y = 0.00+0.47*ln(x) [se=0.13]
Correlation=0.54
-.5
-.25
0 and Happiness .25
Sacks, Stevenson
& Wolfers, Income
Change in log GDP, relative to country and wave fixed effects
.5
31
βpanel ≈ 0.35
GRC 07-97
ITA 97-87
GDR 97-87
NOR 97-87
.2
ESP 07-97
FRA 07-97
GRC 87-77
DNK 87-77
FRG 97-87
NLD 87-77
LUX 87-77
DNK 97-87
PRT 97-87
FRG 87-77
ITA 87-77
GBR 07-97
NLD 97-87
GBR 87-77
FIN 07-97
BEL 97-87
IRL 07-97
0
IRL 97-87
ITA 07-97
DNK 07-97
FRA 97-87
SWE 07-97
GBR 97-87
LUX 07-97
LUX 97-87
FRA 87-77
BEL 07-97
PRT07-97
07-97
AUT
NLD 07-97
ESP 97-87
-.2
GDR 07-97
FRG 07-97
BEL 87-77
IRL 87-77
GRC 97-87
-.4
Change in satisfaction, relative to country and wave fixed effects
.4
Long Differences: Eurobarometer
-.2
y = 0.01+0.28*ln(x) [se=0.16]
Correlation=0.19
.2
Sacks, Stevenson0& Wolfers, Income and Happiness
Change in log GDP, relative to country and wave fixed effects
.432
Conclusion: Stylized Facts about Well-being and Income

Within-country comparisons



Between countries:







Japan
USA
9 European nations
International Panel data



Since 1946
Multiple datasets
Both happiness and life satisfaction
No evidence of satiation
National Time Series


USA
All countries
World Values Survey
Eurobarometer
Other measures of well-being

βwithin ≈ 0.35
βbetween ≈ 0.35
βtime series ≈ 0.35
βinternational panel≈ 0.35
Pain, depression, smiling, good tasting food to eat, respect
Sacks, Stevenson & Wolfers, Income and Happiness
33
Is there any evidence of satiation?
“if we compare countries, there is no evidence that richer countries are happier
than poorer ones – so long as we confine ourselves to countries with incomes over
$15,000 per head.” - Layard (2005)
 Rich countries (GDP>$15,000)

Satisfaction=1.08*log(GDP)
[se=0.21]
 Poor countries (GDP<$15,000)

Satisfaction=0.35*log(GDP) [se=0.04]
 A 1% rise in GDP:

Has three times larger effects in rich countries than poor countries
 A $100 rise in GDP


3x larger effect in Jamaica than US
20x larger effect in Burundi than US
Stevenson and Wolfers, Subjective Well-Being
34
Is there any evidence of satiation?
 “if we compare countries, there is no evidence that richer countries are happier than
poorer ones – so long as we confine ourselves to countries with incomes over $15,000 per
head.” - Layard (2005)
Linear income scale
Rich countries (GDP>$15,000)


Satisfaction=0.35*log(GDP) [se=0.04]
A 1% rise in GDP:


[se=0.21]
Poor countries (GDP<$15,000)


Satisfaction=1.08*log(GDP)
Has three times larger effects in rich
countries than poor countries
A $100 rise in GDP


3x larger effect in Jamaica than US
20x larger effect in Burundi than US
BRA
MEX
0.5
0.0
-0.5
-1.0
DNK
1.5
FIN
CHE NOR
NLD
CAN
SWE
AUS
NZL
BEL
ISR
ESP
AUT IRL
USA
FRA
GBR
ITA
VEN
CRI
SAU
1.0
Life satisfaction (ordered probit index)

Log income scale
DNK
1.5
PRI
DEU
JPN
SGP
CZE
ARG
JOR
CYP
JAMPAN
TWN
KWT
CHL
COLMYS
GRC
GTM THA LTU
TTO
HRV
SVN
DZAURY
KOR
SLVBLR
POL
LBN
HKG
CUB KAZ
HND
BOL
ESTPRT
IND IRN
MMR
VNM
SVK
EGY
UZB
MNE
HUN
MRT
PAK
DOM
UNK
MDA
ZAF
LAO
ECU ROM
IDN
BIH RUS
ZMB PER
UKR BWA
SRB
PRY
AZE
NGA
PHL
TUR LVA
KGZ
ALB
MAR
TJK
MOZ
SEN
CHN
NPL
GHA
NICMKD
YEM
LKA
BGD
ARM
RWA
BDI
AGO
AFG
KEN
MLI
MDG
BGR
CMR
MWI
ZWE
BFA
GEO
HTI
ETH
UGA
IRQ
NER
TZA
SLE
KHM
TCD
BEN
TGO
1.0
ARE
0.5
0.0
-0.5
-1.0
-1.5
FIN
CHE
NLD
CAN
NOR
SWE
AUS
NZLBEL
VEN
ISR
ESP
IRL
AUT
USA
CRI
FRA
SAU
GBR
ITA
ARE
BRA
MEX PRI DEU
JPN
CZE SGP
ARG CYP
JOR
JAM PAN
TWN
CHL KWT
COLMYS
GRC
LTU
GTM
THA HRV
TTO
SVN
DZA URY
KOR
SLV BLR
POL
LBN KAZ
HKG
CUB
HND
PRT
EST
IND
MMR BOL
VNM
IRN
SVK
EGY
UZB
MNE
HUN
MRT
PAK
DOM
UNK
MDA ECU
ZAF
LAO
ROM
RUS
IDNBIH
PER
ZMB
UKR BWA
SRB
PRY
AZE
NGA KGZ
PHL
TUR LVA
ALBCHN
TJK
MOZ
SENGHA MAR
NPL
NIC MKD
YEM
LKA
BGD
ARM
BDI RWA
AGO
AFGMDG
KEN
MLI
BGR
CMR
MWI BFA ZWE
HTI IRQGEO
UGA
NER ETH
TZA
SLE
KHM
TCD
BEN
TGO
-1.5
0
10
20
30
40
0.5
1
2
4
8
16
32
Real GDP per capita (thousands of dollars)
Sacks, Stevenson & Wolfers, Income and Happiness
35
Happiness and GDP (World Values Survey)
4
1.0
NGA
Happiness (1-4 Scale)
MEX
PRI
ISL
NLD
DNK
CAN
IRL
SAU
BELUSA
0.5
LUX
SWE
AUT
PHL
SGP
FRA
CHL ARG MLT JPN
IDN
FIN
ZAF
ESP
MAR
UGA KGZ
BIH
DEU
PRTISR
CZE
KOR
PERDZA
ITA
PAK IND
0.0
POL
JOR TUR
GRC
SVN
BGD
CHN MKD HRV
IRN LTU HUN
SCG
EST SVK
BLR
ZWEIRQ
LVA
ALB
-0.5
MDA
RUS
UKR BGR
ROM
VEN
VNM
3
EGY
y = -0.89+0.11*ln(x) [se=0.05]
Correlation=0.29
Excluding NGA and TZA: y = -1.70+0.20*ln(x) [se=0.04]
Correlation=0.49
2
.5
1
2
4
8 and Happiness
16
Sacks,
Stevenson
& Wolfers,
Income
GDP (log scale)
32
Standardized happiness
TZA
-1.0
36
Happiness versus Life Satisfaction
Happiness
Life satisfaction
Kettering-Gallup Survey, 1975
1.5
1.5
0.5
CAN
USA
GBR
AUS
FRA
DEU
JPN
ITA
BRA
0.0
MEX
BRA
0.0
-0.5
IND
y = -4.20+0.45*ln(x) [se=0.14]
Correlation=0.72
-1.5
1
Ordered probit index
CAN
GBR
DEU USA
ITA
JPN
FRA
MEX
0.5
-0.5
-1.0
AUS
1.0
1.0
2
4
8
16
32
-1.0
IND
y = -4.77+0.52*ln(x) [se=0.14]
Correlation=0.78
-1.5
1
64
2
4
8
16
32
64
First European Quality of Life Survey, 2003
1.5
1.5
1.0
DNK
IRL
FIN
AUT
MLT
ESPSWE
CYP
GBR
BEL
GRC DEU
NLD
ITA
SVN
FRA
CZE
ROM
HUN
POL
PRT
EST
TUR
SVK
LTU
LVA
BGR
0.5
0.0
-0.5
-1.0
LUX
1
2
4
8
16
32
0.5
0.0
-0.5
y = -5.09+0.52*ln(x) [se=0.07]
Correlation=0.82
-1.5
DNK
FIN
SWE
AUT
IRL
ESP
BEL
NLD
GBR
MLT
CYP
DEU
ITA
SVN
GRC FRA
CZE
ROM
POL
HUNPRT
EST
SVK
TUR
LVA
LTU
1.0
BGR
-1.0
y = -7.75+0.79*ln(x) [se=0.10]
Correlation=0.85
-1.5
1
64
LUX
2
4
8
16
32
64
Eurobarometer, 2006
1.5
1.5
1.0
0.5
DNK
IRL
NLD
SWE
BEL
GBR
FRA
FIN
ESPFRG
POL PRT
AUT
CZE
GRCITA
GDR
SVK
EST
LTU
LVA
HUN
SLV
0.0
-0.5
ROM
-1.0
BGR
1.0
LUX
1
2
4
8
SLV
0.0
-0.5
y = -5.59+0.56*ln(x) [se=0.12]
Correlation=0.68
-1.5
0.5
16
32
64
-1.0
-1.5
1
2
4
DNK
SWE
NLD
LUX
FIN
GBR
BELIRL
ESPFRG
AUT
CZE FRA
TUR
HRV
EST GDR
SVK
POL
GRCITA
LVA
LTU PRT
HUN
ROM
BGR
y = -5.92+0.60*ln(x) [se=0.15]
Correlation=0.61
8
Sacks, Stevenson
&perWolfers,
Income
and
Real GDP
capita (thousands
of dollars, log
scale)Happiness
16
32
64
37
More Income is Associated with
 Less Pain
 More Enjoyment
 Less Depression
 BUT More Stress
 How do people’s days differ with income?



More likely to be treated with respect
More likely to eat good tasting food
More likely to smile or laugh
 And people are more likely to want to have more days like
the one that they just had
Stevenson and Wolfers, Subjective Well-Being
38
Enjoyment
Physical Pain
Percent experiencing the indicated feeling yesterday
Correlation: 0.49
Worry
Correlation: -0.41
Sadness
Correlation: 0.11
Correlation: -0.13
80
80
80
80
60
60
60
60
40
40
40
40
20
20
20
20
0 y=34.5+4.26*ln(x) [se=0.67]
0.5
2
8
0 y=47.9+-2.44*ln(x) [se=0.48]
32
0.5
Boredom
2
8
0 y=25.8+0.95*ln(x) [se=0.76]
32
0.5
Depression
Correlation: -0.16
2
8
0 y=27.4+-0.69*ln(x) [se=0.47]
32
0.5
Anger
Correlation: -0.34
80
80
60
60
60
60
40
40
40
40
20
20
20
20
0.5
2
8
32
0.5
2
8
32
0 y=28.4+-0.97*ln(x) [se=0.55]
0.5
2
8
32
Real GDP per
(thousands
of dollars,
log scale)
Sacks, Stevenson
&capita
Wolfers,
Income
and Happiness
32
Correlation: 0.23
80
0 y=29.9+-1.80*ln(x) [se=0.44]
8
Love
Correlation: -0.15
80
0 y=35.1+-1.23*ln(x) [se=0.67]
2
0 y=47.5+2.44*ln(x) [se=0.93]
0.5
2
8
32
39
Would you like to have
more days just like yesterday?
Did you feel
well rested yesterday?
Percent reporting indicated feeling
Yesterday
Were you treated with
respect all day yesterday?
Were you able to choose how
you spent your time all day?
80
80
80
80
60
60
60
60
40
40
40
40
20
20
20
20
Correlation = 0.14
Correlation = 0.15
0 y=59.2+0.99*ln(x) [se=0.61]
0.5
2
8
Correlation = 0.43
0 y=56.9+1.01*ln(x) [se=0.61]
32
0.5
Did you smile or
laugh a lot yesterday?
2
8
32
Were you proud of
something you did yesterday?
Correlation = 0.19
0 y=54.2+3.49*ln(x) [se=0.65]
0.5
2
8
0 y=57.3+1.44*ln(x) [se=0.67]
32
0.5
Did you learn or
do something interesting yesterday?
80
80
80
60
60
60
60
40
40
40
40
20
20
20
20
Correlation = 0.28
Correlation = 0.00
0.5
2
8
32
Correlation = 0.01
0 y=59.5+0.03*ln(x) [se=1.00]
0.5
2
8
32
2
32
Correlation = 0.59
0 y=51.5+0.14*ln(x) [se=0.94]
0.5
8
Did you have good
tasting food to eat yesterday?
80
0 y=47.2+2.66*ln(x) [se=0.79]
2
8
32
Real GDP per
(thousands
of dollars,
log scale)
Sacks, Stevenson
&capita
Wolfers,
Income
and Happiness
0 y=26.6+5.61*ln(x) [se=0.68]
0.5
2
8
32
40
Enjoyment
Proportion who experienced this feeling
during a lot of the day yesterday
0.90
CAN
NZL DNK
KWT
IRL
NOR
USA
LAO
SWE
CRI
CHE
AUS
NLD
AUT
PRYSLV
CYP
GBR
CHN ECU
GTM
MEX
ARG
TWN
BEL
UZB
VEN
THA
DJI IDN
BRA
TTO
NPL
COLPAN
SAU
MLI
JAM
URY
CZE
MYS
CHL
DEU
FRA
GUY
HND
ARE
KEN
MRT PHL
LVA
ZAF
BLZ
SVK
HUN
SEN
NIC BOL
NER
POL EST
SGP
TZA NGA
NAM
FIN
BGDKHM
ISRJPN
IND LKA
GIN
JOR PERROU BWA GRC HKG
SDN
SVN
DOM
MWI ZMB
KAZ
AFG
ESP
RWA
TJK
MKD
SRB RUS
ITA
CAF
EGYBIH
KGZ MDA
UKR
MDG
MMR
KOR
TUNBLR HRV PRT
TCD PAK COG
BFA
UGA
SYR
GHA
LTU
BGR
CMR
IRN
ALB
LBN
MNG
ETH
AZE
HTIBEN YEM MAR AGO
TUR
MOZ
DZA
ARM
TGO
VNM
0.80
0.70
ZWE
COD
0.60
0.50
LBR
BDI
GEO
SLE
Correlation
=
0.49
0.40
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
41
Depression
Proportion who experienced this feeling
during a lot of the day yesterday
0.40
ETH
0.30
KHM
YEM
SLE
BGD
HTI
IRN
KOR
BOL
LBN
PHL
RWA
EGYAZE
PAK
ARM
HUN
PER
DZA
IND
NIC
AFG
CMRMDA SYR
UGA
PRT
BLZ
DOM
ARE
JOR ECU
SRB
BLR
TUR
JPN
BIH
COL
TZA TJK
HRV
ZAF CHL
TTO
GEO
BWA
SDN GUY
GTM TUN
MKD
MDG
TGO
COG UKR
MOZ
MAR
RUS CZEISR
MWI
GIN
TWN
URY
NGA
LKA
SLV
KAZ
JAM
AGO
MNG
VNM
ROU
BGR
HKGSGP
CRI
MEX
SVK
LTU
GHA
EST
NAM
SAU
USA
KWT
ITA
MYS
HND
VEN
ARG
LVA GRCGBR
BEN
ZMB
NPL
TCD
CHN
ESP
CYP
PRY
NER
AUS
KGZ
BEL
BRA
FIN
UZB
PAN
CAN NOR
KEN DJI
SVN
MMR
MLI
NZL
THA
CAF BFA
FRA
POL
MRT
IRL
DEU
NLD
IDN
AUT
SWE
CHE
LAO
SEN
DNK
ALB
LBR
0.20
ZWE
0.10
0.00
BDI
COD
Correlation = 0.29
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
42
Stress
Proportion who experienced this feeling
during a lot of the day yesterday
0.80
PHL
0.60
SYR
USA
DZA ROU
LBN
TUR
HKG
IRN
KOR
NZL
TUN
DEU
DOM
ITA
TJK
AUS
CAN
PRTISR
BLZ
KHM
SLERWA
CHN COL
PER
GBR
MDGHTI
BOL
ECU CRIMEXSVK TWN
BEL SGP
JPN
JOR
FRA
CHE
EGY
UGA
AUT
NGA
MYSHUN
URY
YEM
IRL
ARE
TZA
TTO
BGD
ARG
BRA
ZAF
CHL
SLVTHA
VEN
LVA
IND
NIC
ESP
GHA
MWI
KWTNOR
FIN
SAU SWE
CZE
POL
BWA
ETH
GTM JAM
CMR
VNM
KEN
HND
PAN
AGO
SEN PAK
ESTSVN DNK
NLD
AFG
ARM
TGO
MDA GEO
TCD
MOZ ZMB
BEN
BLR LTU
COG AZE
UKR KAZ
NER
PRY
RUS
NPL
BFA LAO MNG
IDN
MLI
KGZ
MMR
UZB
DJI
MRT
0.40
GUY
LKA
ZWE
0.20
0.00
GRC
CYP
BDI
LBR
Correlation = 0.33
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
43
Were you treated with respect all day yesterday?
1.00
ESP
PRY
NLD
PRT
ARG
KWT
SWE
COL
VEN
IRL
CHE
CRI
BEL
FRA
AUT
DOM
BRA
NIC
DNK
URY
SLVECU
POL
FIN
PAN
DEU
ARE NOR
CHLTTO SVN
NZL
UZB PHL
CYP
AUS
PER
CAN
ITA
HND
NER
BOL
VNM
EGY
GBR
USA
TWN
GRC
ARM
MEX EST
LBN
MOZ
SEN SDN
HUN
CHN
GIN GHA MRT
LVA
ROU RUS
JOR
NAM
TUN
IDN
MLI
PAK
GTM
ISR HKG
MAR
BGR
BFA KGZ
AFG
SAU
UKR
YEM
KEN
BWA
NGA
AGO MKD
MDGTZA TJK
KAZ
SVK
IRN
MYS
SRB
ZMB
JAM
DZA
AZE
HRV
MDAGUY
SYR BLZZAF
COG
GEO
BLR
BEN
SLE
BGD CMR
ALB
CZE
DJI
TUR
MWI
CAF
KHM
TGO
SGP
BIH
THA
IND
UGA
LKA
LTU
Proportion agreeing
0.90
LBR
COD
0.80
0.70
ZWE
BDI
HTI TCD
RWA
ETH
0.60
MNG
JPN
KOR
LAO
0.50
MMR
Correlation = 0.46
NPL
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
44
Did you have good tasting food to eat yesterday?
1.00
Proportion agreeing
PRT
IRL
FIN
CAN
AUT
NLD
GUY
NZL
TTO SVN
USA
PRY
SWE
AUS
MEX
LAO
DNK
BEL
HRV
VEN
GBR
SVK
KWTNOR
JAM SRB
EST
ARE
HUN
CHE
PAN
DEU
ITA
THA
MNG
UZB
EGYBIH
CZE ESP
SEN
MKD
CRI
ARG
BGR
MRT
URY
SAU
ECU
POL
JOR BLZ
GHA NGA
BRA
LTU CYP
SDN
ROU
COL
CHL
MDG
FRA
JPN
ISR
KAZ
KGZ
SLV
LBN
HND
GTM
BOL
IRNMYS
UKR
GIN
RUS
DOM
PER
TUR
NAM
LVA GRC
MOZNPL
ZAF
TZA
NICPHL
ALB
AZE BLR
KOR
AFG MMR KEN
TJK PAK
SLE
HKG
VNM
AGO
CMR
NER MLI
TGO
MDA
BWA
SGP
MAR
MWI
KHM
CAF
IND
BFA
ZMB
UGA
TCD
TWN
ARM
HTI
BGD
YEM
CHN
GEO
RWA
BEN
ETH
IDN
LKA
0.80
LBR
COD
0.60
ZWE
0.40
BDI
Correlation = 0.60
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
45
Did you smile or laugh a lot yesterday?
0.90
NAM
SLV
CRI
VEN
PAN
IRL
LAONIC
PRY
BRA
PHL
ECU
ESPCAN
HND
NGA
ARG
NZL
GTM THA
MEXTTO CYP
COL
KWT
TWN
BEL
USA
JAM
NLD
CHN
AUS
JPN
DOM
ZAF
SDN IDN
GBR
LKA
CHL
DNK
URY
BOL
AUT
CHE
GUY
SWE NOR
MYS PRT FRA
PER
MRT
VNM
TZA
BLZ
MDG GHA
HKG
FIN
RWA
BWA GRC
EGY
MLIZMBKHM
POL
DEU
ARE
KEN
MOZ
MWI
NER
ITA
DJI
SEN
KOR
CZE
MAR
ISR
SGP
GIN
PAK
JOR
UZB
TUN
SAU
SLE UGA
HTI KGZ
COG
DZA
TUR
MMR
BFABEN
AGO
IND
HUN SVN
YEM
SYR
KAZ
CMR
IRN
SVK
AFG NPL
TJK
UKR ROU RUS
LVA
EST
ETH BGD
LTU
BGR
BLR
TCD
MNG
CAF
BIH
MKD
MDA
TGO
LBN HRV
ARM
Proportion agreeing
0.80
LBR
0.70
ZWE
0.60
0.50
COD
ALB
SRB
AZE
0.40
Correlation
= 0.29
BDI
.25
.5
GEO
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
46
Would you like to have more days just like yesterday?
0.90
KWT
HND SLV
SGP
MEX
PRY
VEN
CRI
MRT
PAN
DJI
GTM
UZB
NIC IDN
ECU
ARG
SAUESP
PAK
JAM
COL
KEN
IRL
TZA NGA PHL
BOL
AFG
ARE
DNK
URY
NER
PRT FRA
MOZMLI SEN
BRA
SWE
BEL
CAN
NLD NOR
MKD
BLZ
PER
ZAF
MYS
USA
CHE
NPL
CZE
NAM
GUY
BIH
AGO
HKG
CHL
SRB
THA
MDG GHA
LTU
HUN
VNM LKA
ESTNZL
TTO
DOM
KGZ
LAO
SDN
IND
JOR
ISRGBR
BGR
ZMBTJK
AUS
HRV SVN
BFA
POL
UKR KAZ
FIN
LVA
TUR
JPN
AUT
CYP
ROU
MWI
UGA TCD
BWA
KHM
SLE GIN
CHN
TWN
EGY
ETH HTI
GRC
SVK
MDA
LBNRUS
RWA
BGD CMR
BLR
KOR
MAR
ITA
MNG SYR
DEU
MMR BEN
AZE
CAF
COG ALB
TGO
DZA
ARM
YEM
IRN
TUN
Proportion agreeing
0.80
0.70
0.60
ZWE
BDI
COD
LBR
0.50
0.40
Correlation = 0.21
GEO
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
47
Were you able to choose how you spent your time all day?
0.90
KWT
JPN
ESP
VNMPHL
SLV
CHN
PRY
BEL
NGANIC
CRI
VEN TTO ITA
ARM
IRL
PAN
BRA
FRA
NAM
TWN
COL
MDG
AUT
AFG
MRTPAK HND
GTM ECU
ARE
DOM MYS
HKG
UZB
JAM
PRT
KEN
LAO
NER
NLD
DNK
TZA
MEX
KOR
ZAF
SEN
SAU GBR
FIN
GIN
UGAGHA
HUN
ARG
TGO
SWE
AGO
URY
THA
SLE
CAN
SDN IDN
BLZ
POL
USA
CAF
NZL AUS
BOL
RWA ZMB CMR
CHE
PER
CHL
EGY
BWA
BFABEN
NOR
ROU
DEU SGP
LBN
JOR
MWI
MOZ
BGR LVA SVN
LKA
KAZ
GUY
MAR
MLI
YEMMNG
SRB RUS
HRVEST GRC
KHM MDA
UKR
MKD
TCD
BLR
KGZ
SVK
BIH
LTU
ETH
CZEISR
TJK
CYP
BGD
IND
NPL
TUR
HTI
IRN
MMR
0.80
Proportion agreeing
LBR
COD
0.70
ZWE
BDI
0.60
0.50
GEO
0.40
AZE
ALB
Correlation = 0.13
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
48
Anger
IRN
Proportion who experienced this feeling
during a lot of the day yesterday
0.40
ARM DZA
HTI
0.30
SLE
YEM
PHL
SYR
GUY
PAK
TUN
LBN
ARE
SVK ISR
BOL
JOR
GEO
CZE FRA
EGY
TGO
AZE
SAU
BIH SRB
BGDTCD
COG
CHL
CAF BFA
BLZ
ECU
MKD
MAR
UGA
POL KOR
COL
PER
IDN
LTU
GINTZA
IND
SGP
AGO
SEN
BEN
ETH
ARG
AFG
LAO
UZB
NGA
CMR
ESP
MYS TTO
JAM
LKA ALB
MDA
ZMBKHMSDN
ROU
USA
VENHRV
MNG GTM
DEU
BEL
CYP
HUN SVN
GBR
GRC
AUS
BRA
BLR
ITA
NZL
GHA
MWI
URY
TJK
BWA
MRT
JPN
CAN
KWT
HKG
MDG
CHN
MOZ
ZAF
DOM
DJI
UKR
TWN
CRI LVA
NERRWA
DNK
CHENOR
MLI KEN NIC
THAKAZ
AUT
EST
IRL
BGR
RUS
NAM
SWE
SLV
PAN
PRY
NPL
VNM
KGZ
MEX PRT
NLD
HND
LBR
BDI
COD
0.20
TUR
ZWE
0.10
MMR
FIN
0.00
Correlation = 0.13
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
49
Boredom
TUR
Proportion who experienced this feeling
during a lot of the day yesterday
0.50
GEO
ARM AZE
SYR
DZA
MAR
0.40
YEM
AFG
ETH
0.30
PHL
KHM
TUN
ALB
LBN
HKG
IDN EGY
BOL
BLZ
GRCARE
RWA
PER
KOR
CHL
MDA
AGO COL
SRBMEX
MKD
USA
SLE
TGOUGA TJK
GUY
ISRGBR
BIH
SAU
MYS
GIN
SLV
ROU
CMR
ECU
GTM
THA URYHRV
BEN
KEN
BLRARG
BGDTCD PAK
AUS
NOR
SGP
ITA
CAN
BWA
ESP
IRL
TTO NZL
BGR
CHN
CRI
UKR
JAM
POL
LKA
DOM
UZB
SDN
GHA KGZ
KAZ RUS
ZAF
CAF NPL
TWN
JPN
VEN LTU
HND
TZA
KWT
IND
BFA
NAM
MOZ
MDG
FIN
ZMBSEN
EST
CYP
SVK
SWE
PRT FRA
MLI
PAN
VNM
MWI
BRA
LVACZE BEL
CHE
MNGPRY
NER
SVNDEU
DNK
MRT
AUT
NGA
HUN
= 0.11
LAO
NLD
MMR
NIC
ZWE
LBR
BDI
0.20
COD
0.10
HTI
JOR
IRN
Correlation
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
50
Sadness
Proportion who experienced this feeling
during a lot of the day yesterday
0.40
KHM
LBR
SLE
0.20
TUR
HTI
PRT
IRN
NIC
TGO
ROU
MDA
CHL
DOM
BLR
YEM COG
EGY
AGO
SYR
LTU
ECU
BGD
COL
ITA
HRV
LBN
BEN PAK
BGR
ARG
CMR
GUY
ISR
SRB
CAF
BRA
RWA
GIN
GBR
GTM AZE
HUN
POL
SVK
GEO UKR
BLZKAZ
MOZ
MEX
LVA
SLV
URY
RUS
DZA
BIH CRI
VNM
ALB
BFA
ESPARE
CYP
ETHUGA
ZMB
IND IDN
BWA
LKA
TCD SDN
TUN
ZAF
EST
JAM
SGP
DEU
AFG
GRC
TZA
PRY
BELUSA
FRA
MAR
TTO NZL
HND
AUS
JOR
GHA
CHE
CZE CAN
TJK
MWI
MKD
VEN
IRL
UZBMNG
KOR
SVN KWT
SEN
NLD
NER MDG
PAN
KGZ
AUT
NOR
NGA
MLI KEN
MYS SAU SWE
DNK
HKG
NPL
NAM
JPN
FIN
MRT
DJI
LAO
CHN THA
TWN
0.30
ZWE
BOL
PHL ARM PER
BDI
COD
0.10
MMR
0.00
Correlation = 0.15
.25
.5
1
2
4
8
16
Realand
GDP
per Capita
at PPP ($000s,
log scale)
Stevenson
Wolfers,
Subjective
Well-Being
32
64
51
Worry
0.60
Proportion who experienced this feeling
during a lot of the day yesterday
HRV
BOL
0.50
TGO
MOZ
0.40
LBR
COD
BDI
0.20
0.10
PER
DZA
PRT
SRB
CHL
ARG
URY
PRY
BRA
AGO TUN
ROU
ISR
ITA
GIN
EGY DOM
COLIRN
KOR
HKG
ECU
BIH
CAF
SLE
BFA
LBN SVK
CMR PHL SYR
HUN CYP NLD
CRI
COG
CAN
LVA GRC
BGD
MDA JOR
MKD TUR
MEX
BELUSA
SLV
CZEESP
ALB
AZE
GTM
NZL
MAR
FRA
CHE
PAK
POL
IDN
AUS
TCD
BGR LTU
GBR
GUY
BLR
SEN
FIN
VNM
HTI
BWA
ARE
ZAF
UGA
IND HND
VEN
MLIZMB
EST DEU
JPN
UKR
BLZ
SGP
SAU
THA
AFG
MWI
SDNMNG GEO
MDG
RUS
PANMYS
CHN
IRLNOR
DNK
AUT
NER NPLGHA
TTO
NAM
RWA
KWT
MRT
NGA
UZB
ETH TZAKEN
JAM
SWE
KAZ
LAO
LKA
KGZ
TJK
TWN
ZWE
0.30
ARM
SVN
Correlation = 0.09
YEM
KHM
BEN
NIC
DJI
MMR
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
52
Were you proud of something you did yesterday?
LAONIC
VEN
CRI
NGA
PAN
ECU
NER
SLV
MRT
NZL
NAM COL
SDN
KHM
SEN
TTO
GIN
THA
HND
CAN
DOM
USA
GTM
MLI
IRL
BOL
PRY
AUS
BRA
PER
GUY
CHL
BLZ
IDN
MEX
SVN
JAM
ARG
KEN
KWT
ZMB CMR
MOZ BFA
ESP
ROU
SLE
URY
AUT
TZA
ZAF
KOR SWE
UZB
AGO
SAU
NLD
FIN
TGO
GHA
MYS
GBR
CHE
MWI
POL
HUN ITA
UGA
CAF
TCD
AFG
DNK NOR
BEL
PRTISRDEU
MDA
SRB
TUR
BIH
MDGHTI
BWA
SVK CYP
PHL EGY MKDLBN HRV
ARE
LVA
EST
VNM
KGZ
CZE
TJK
FRA
UKR KAZ LTU GRC
BEN
BLR
RWA
SGP
ETH
PAK
ARMALB
RUS
JPN
MAR
JOR
LKA
CHN AZE IRN
BGR
YEM
Proportion agreeing
0.80
BDI
LBR
0.60
COD
ZWE
0.40
MMR
NPL
BGD
0.20
IND
MNG
TWN
HKG
GEO
Correlation = 0.00
.25
.5
1
2
4
8
16
Real and
GDPWolfers,
per Capita
at PPP ($000s,
log scale)
Stevenson
Subjective
Well-Being
32
64
53
Did you feel well rested yesterday?
0.90
KWT
PRY
IDN NAM
Proportion agreeing
0.80
VEN
CHN
MYS
JPN
HND SLV THAPANMEX
HKG
CRI
MRT
ESP IRL
COL
VNMPHL
SGP
LAO
ECU
TWN
AUT
ARE
NGA
UZB
NPL
NIC MAR
ZAF
ARG PRT
URY
SAU NLD
DJI
GTM
EGY
TZA
SDN
BOL
AFG
MWI
CHE
KEN
GHA
SEN
KOR BEL
CAN
MLI
GIN
FIN
MNG
BLZ
DOM
NER
JOR
SVN
COG
DNK NOR
PER
UGA
CHL
BWA
MKD
ZMBKHM PAK GUY
BRA
DEU
JAM
SWEUSA
IND
MOZ BGD KGZ
BGR
CMR
GBR
AGO TUNSRB
RWA
TTO NZL
IRN
FRA
AUS
ISR
SLE
KAZ
LKA
BIH
POL
TUR
ITA
GRC
CZE
TCD
BEN
SVK
HRV
EST
CAF BFA
HTI TJK
LBN LVA
SYR UKR ROU RUS
LTU
YEM
TGO
MDG
DZA BLR
MMR
ETH
CYP
MDA
HUN
AZE
ALB
GEO
ARM
0.70
COD
0.60
ZWE
LBR
BDI
0.50
0.40
Correlation = 0.14
.25
.5
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
54
Did you learn or do something interesting yesterday?
Proportion agreeing
0.80
VEN
NGA
SLV
NIC GUY
ECU PAN
CRI
GTM
GIN
MRT
NER
DJI
COL
TTO NZL
NAM
KWT
MLI SEN
JAM
HND
BLZ
THA
CAN
PHL PRY
SLE
BOLAGO
MEX
KEN SDN
NOR
PER
DOM
USA
DNK
TZA
AUS
BRA CHL
RWA ZMB
IRL
VNM
CMR
GHA
SWE
FIN
ARE
CAF
MOZ
JPN
CHE
AFG
MYS
ARG
UGA
AUT
PRT
GBR
MWI
ZAF BWA
ESP
TCD
FRA
URY
COG
SAU
LAO
BFA
EGY
SVN
BEL
ISRDEU
HTI
CZE
BIH
ETH
HRV
IDNJOR
ITA
SGP
MKD
UZB
CYP
EST
NLD
LVA
BEN
POL
MDA SYR DZA SRB
ROU
LBN
TWN
MAR
TGO
LTU GRC
KGZ
TJK
UKR KAZ RUS
YEM
SVK KOR
PAK LKA AZE
TUN TUR HUN
IRN
ARM
BLR
KHM
CHN
IND
ALB
MMR
HKG
MDG
BGR
MNG
NPL
LBR
0.60
COD
ZWE
0.40
BDI
0.20
Correlation = 0.01
BGD
.25
.5
GEO
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
32
64
55
Love
Proportion who experienced this feeling
during a lot of the day yesterday
1.00
RWA
KHM
HUN
TTO CYP
LBN
CRI
NGA
ESP
TZA LAO
MEX
ECU
JAMBRA
VEN
ARG
BEL
GRC
CAN
DNK
USA
PRT
NLD
VNM
NZL
ITA
COL URY
MDG
DOM
TUR
ARE
SAU AUS
MWI
CAF
GHA
ZAF
PANCHL
KEN PAK
ZMB
NAM
NIC
DEU
IRL
SWE
CHE
AUT
GBR
FRA
KWT
FIN
SLV
HND
PER
SRB
EGY
BIH
SLE
IND
TWN
BGD
BLZ
HRV SVN
MKD
BOL
MOZ HTI
IRN
CHN
NOR
LKA
POL
GTM THA
UGA
ISR
SDN
JORALB
GIN
BWA
BFA
ROUMYS
NER MLI SEN
IDN AGO
AFG
HKG
CMR
BGR SVK
NPL
CZE JPN SGP
MRT
KOR
MMR BEN
LVA
TGO
EST
LTU
RUS
TCD YEM
UKR
ETH
AZE
TJK MDA
KAZ
MAR
BLR
GEO
PRY
GUY
0.80
LBR
ZWE
0.60
PHL
BDI
COD
0.40
KGZ
UZBMNG
ARM
0.20
Correlation = 0.19
.25
1
2
4
8
16
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
.5
32
64
56
Physical Pain
Proportion who experienced this feeling
during a lot of the day yesterday
0.50
SLE
CAF
LBR
0.40
TGO
ETH
EGYDZA
SYR
YEM
CMR
SDN
NER
JOR PER
SEN
BEN
COG
CHL
AGO TUN
ARM
DOM ARG
BFA MRTNIC BOL
AZE ROU
PAK
MOZ TZA
UGA
ISR KWT
GIN
TCD
ALB
HUN
GEO
ECU
KHM
RWA GHA
PRT ESP
BRA
FRA
IRN
CRIMEX
LKA SLV COL
GTM UKR LBN
CYPBEL
URY BWA KOR
MWI
VEN
CHESGP
NGA
TJK
USA
HRV
SVN
MAR
GUY
BGD
GRC
MLI
KAZ
BLR
KGZ
IND
NPL
NZL
HND
SVK
PHL
GBR
CAN
AUS
AFG MMRZMB
UZB
BLZSRB
TTO ITA
PRY BIH
ARE
ZAF
MKD
LTUCZE DEU
TUR
DJI
THA BGRRUS
DNK
AUT
PAN LVASAU SWE
MDG KEN
NLD
FIN
NAM
POL
JPN
NOR
IDN
MYS EST
TWN IRL
HKG
CHN JAM
MNG
LAO
0.30
ZWE
BDI
COD
0.20
0.10
MDA
HTI
Correlation = 0.39
VNM
.25
.5
1
2
4
8
16
32
Real GDP per Capita at PPP ($000s, log scale)
Stevenson and Wolfers, Subjective Well-Being
Source: Alan Krueger, Betsey Stevenson and Justin Wolfers, “A World of Pain”.
64
57
A Global Map of Pain
Stevenson and Wolfers, Subjective Well-Being
58
 Blank slide: End of talk
Sacks, Stevenson & Wolfers, Income and Happiness
59
Research Program
 Research program (with Betsey Stevenson) that seeks to
establish robust stylized facts about subjective well-being






Relationship between income and happiness
“Economic Growth and Happiness: Reassessing the Easterlin Paradox”
Consequences of income inequality
“The Happiness Price of Income Inequality” (in progress)
Happiness and gender
“The Paradox of Declining Female Happiness”
Subjective well-being and the business cycle
“Is Business Cycle Volatility Costly?”
Trends in the distribution of happiness
“Happiness Inequality in the United States”
Affect versus evaluative measures of well-being
“A World of Pain” (also with Alan Krueger)
Sacks, Stevenson & Wolfers, Income and Happiness
60
Subjective Well-Being
and the Business Cycle
Business Cycle
andthe
Happiness,
U.S.Cycle
Subjective Well-Being
and
Business
Correlation = -0.45
0.10
-2
Standardized happiness index
0.05
0
0.00
1
-0.05
2
3
-0.10
Unemployment rate - Natural Rate
Scale reversed
-1
Happiness
Unemployment, relative to NAIRU (right axis; inverse scale) 4
-0.15
1970
1980
1990
2000
Stevenson and Wolfers, Subjective Well-Being
2010
62
Satisfaction Ladder (%"Thriving": Satisfaction
>8)
30
Stevenson and Wolfers, Subjective Well-Being
Sep-09
Aug-09
Jul-09
Jun-09
May-09
Apr-09
Feb-09
Mar-09
Jan-09
Dec-08
Nov-08
Oct-08
Sep-08
Aug-08
55
Jul-08
60
Jun-08
May-08
Apr-08
Feb-08
Mar-08
Jan-08
New Opportunity:
Daily Data
Satisfaction:
Daily Data
Source: Gallup Daily Poll
50
45
40
35
63
The Paradox of
Declining Female Happiness
Betsey Stevenson and Justin Wolfers
Wharton School, University of Pennsylvania and NBER
UC Berkeley Psychology and Economics Seminar, October 14 2008.
Happiness
%>median happiness / Estimated happiness index
in the United States
Happiness in theHappiness
United States
%>Median Happiness:
Ordered probit index:
Women
Women
Men
Men
Difference
.4
.2
0
-.2
1970
1980
1990
2000
Source: General
Social Survey
Sacks, Stevenson & Wolfers, Income and Happiness
2010
65
Inequality and
Subjective Well-Being
Betsey Stevenson
Wharton School, University of Pennsylvania; CESifo and NBER
Justin Wolfers
Wharton School, University of Pennsylvania; CEPR, CESifo, IZA and NBER
Research Question
Does inequality undermine average levels of
subjective well-being?
Surprisingly mixed findings:




“The presumed link between equality and happiness fails to appear, at least where
income inequality is concerned. Average happiness is as high in countries with great
income inequality as in nations where income differences are small” –Veenhoven
(2000)
Including inequality in our regressions using the available data, we find that is has a
negative effect, although its’ size and significance levels are both low. –Di Tella and
MacCulloch (2008)
“In the whole World Values Survey sample, the Gini coefficient has a positive (albeit
not always significant) effect on life satisfaction.”—Guriev and Zhuravskaya (JEP
2008, p.157)
“Adding a World Bank estimate of the Gini coefficient for each national economy added
no explanatory power to the well-being equation.”—Helliwell (2003)
Stevenson & Wolfers, Inequality & Happiness
67
A Simple Framework
 Individual well-being:
 Average well-being in each country:
 Which implies:
Average of log income,
not
Log of average income
Equal and
opposite effects
Stevenson & Wolfers, Inequality & Happiness
68
Satisfaction
and Inequality,
Conditional
Log GDP
Conditional
Relationship
Between
GDP &onMLD
2.0
Satisfaction
E[Standardized satisfaction | Log GDP]
Satisfaction = 0.30*log GDP (se=0.02) -0.22*inequality (se=0.14)
1.0
CRI
DNK
GUY
FINCOD
GTM
NZLVEN
NLD
PANCOL
CHE
CAN
SWE
JAM
MEX
MOZ
ISR
AUS
NOR
BEL
IRL
VNM
BRA
LBR
USA
LAO
NPL
JOR
AUT
UZB
BDIBGD MWI
CAF
TKM HND
MDA
ESP
GHA
DJI
IND
GBR
NER
N
GA
ARG
UGA
RWA
MDG
ETH PAK
THA
ZMB
NIC
CZE
KGZ
ITA
PRY
TJK FRA
MYSIDN
SEN
GIN
SLV
TTO
DEU
URY
CHL
TZA
MRT
MLI
EGY
TUN
MAR
KAZ
PHL
LUX
ECU
GRC
HRV
BLR
YEM
DZA
KEN
SGP
LTU
POL
CIV
TCD
BFA
CMR
UKR
MNG
HTI
DOM
SLE
KHM
JPN ROU
PER
IRN
CHN
SVN
BIH
TUR
PRT
RUS
LKA
ALBAZE
BEN
ARM
SVK KOR
EST
TGO
MKD
HUN LVA
ZWE
GEOHKGCOG
0.0
BOL
NAM
ZAF
AGO
BWA
COM
BGR
-1.0
-2.0
0.6
0.8
0.0
0.2
0.4
Inequality: E[Mean log deviation | Log GDP]
(World Bank Inequality Data)
Stevenson & Wolfers, Inequality & Happiness
Source: Betsey Stevenson and Justin Wolfers, “Inequality and Subjective Well-Being”.
-0.4
-0.2
69
Variation in Log GDP and Mean Log Deviation
Frequency
30
Inequality: Mean
25
20
15
10
5
*Bars are 1/20th as wide
0
-4
-3
-2
30
Inequality:
25
20
15
10
5
*Bars are 1/20th as wide
0
-4
-3
-2
$1
28
k
2
$6
4k
1
$3
2k
0
$1
6k
-1
$8
k
-2
$4
k
$2
k
$1
k
k
-3
$.
5
$.
2
5k
25
20
15
10
5
0
-4
Frequency
Frequency; Number of countries
Frequency
Distribution
of Log GDP
and
Inequalty
30
Log GDP
per Capita:
SD=1.34
3
4
Log Deviation (Gallup measure): SD=0.16
-1
0
1
2
3
4
3
4
Mean Log Deviation | Log GDP: SD=0.14
-1
0
1
Variation
around
the mean;
Log points
Stevenson
& Wolfers,
Inequality
& Happiness
2
Source: Betsey Stevenson and Justin Wolfers, “Inequality and Subjective Well-Being”.
70
Happiness Inequality in the United States
Betsey Stevenson and Justin Wolfers
Wharton School, University of Pennsylvania and NBER
Wharton August 20, 2008
Aggregate Happiness Trends: Comparing Dist’ns
De-Meaned Level of Happiness
Units: Cross-sectional SD(happiness)
Trends in the Distribution of U.S. Happiness
Average Happiness
0.20
0.00
-0.20
Assuming that the distribution of happiness is:
Normal
-0.40
Variance of happiness
Relative to average level in sample
1972
1976
1980
1984
Logistic
1988
1992
Uniform
1996
2000
2004
2008
1996
2000
2004
2008
Happiness Inequality
1.40
1.20
1.00
0.80
1972
1976
1980
1984
1988
1992
Sacks, Stevenson & Wolfers, Income and Happiness
72
Average Happiness Levels
Estimated as Average Happiness = Group*Year Fixed Effects
Trends in Average Levels of Happiness Between Groups
0.25
0.00
-0.25
Education
-0.50
-0.75
College grads
Some college
High school
<High school
Race
Gender
Men
White
Women
Non-white
0.25
0.00
-0.25
Region
-0.50
Marital Status
Age Group
18-34 yrs 35-49 yrs 50+ yrs
-0.75
1970
1980
1990
2000
2010 1970
Married
1980
Unmarried
1990
2000
2010 1970
Northeast
Midwest
South
West
1980
Sacks, Stevenson & Wolfers, Income and Happiness
1990
2000
2010
73