Wealth Influences Life Satisfaction More Than Income: A Supplement to The Easterlin Paradox

doi:10.1007/978-3-030-05535-6_8

Paper

Wealth Influences Life Satisfaction More Than Income: A Supplement to The Easterlin Paradox

Published 2019 · B. Headey

Social Indicators Research Series

UNKNOWN SJR score

4

Citations

0

Influential Citations

Full textSemantic Scholar

Abstract

The standard view in Life Satisfaction research is that economic well-being has only modest effects on subjective well-being, at least in relatively well off Western countries. More pointedly, the Easterlin Paradox (Easterlin RA, ‘Does economic growth improve the human lot? Some empirical evidence’. In David PA, Reder MW (eds) Nations and households in economic growth: essays in honour of Moses Abramowitz. Academic, New York, pp 89–125, 1974, J Econ Behav Organ 27:35–47, 1995; Easterlin RA, Angelescu L, Happiness and growth the World over: time series evidence on the happiness-income paradox. IZA Discussion Paper No. 4060, Bonn, IZA, 2009) is the claim that ‘economic growth does not improve the human lot’. Using panel data from the Household Incomes and Labour Dynamics Survey Australia (HILDA), this paper investigates the combined effects of changes in wealth, income and consumption on changes in Life Satisfaction; most previous research has focussed solely on static income effects. Results provide strong confirmation of the Easterlin Paradox. The effect sizes of even multi-year measures wealth, income and consumption on Life Satisfaction are small, although statistically significant. In the later part of the paper, it is shown that substantial wealth losses incurred in the Global Financial Crisis (2007–2008) had only a short term effect on Life Satisfaction. As Easterlin would predict, the Life Satisfaction even of individuals whose wealth remained below GFC levels was back to ‘normal’ within 6 years.

Study Snapshot

Wealth has a greater impact on life satisfaction than income, supporting the Easterlin Paradox and indicating that economic growth does not improve the human lot.

PopulationOlder adults (50-71 years)

Sample size24

MethodsObservational

OutcomesBody Mass Index projections

ResultsSocial networks mitigate obesity in older groups.

Sign up to use Study Snapshot

Consensus is limited without an account. Create an account or sign in to get more searches and use the Study Snapshot.

Create an account

Paper

Wealth Influences Life Satisfaction More Than Income: A Supplement to The Easterlin Paradox

Sign up to use Study Snapshot

References

Poverty Redefined as Low Consumption and Low Wealth, Not Just Low Income

Using revised measures of poverty, which consider household consumption and wealth, poverty has substantial negative psychological consequences, but the incidence of poverty is significantly lower than with standard income-based measures.

Happiness and Growth the World Over: Time Series Evidence on the Happiness-Income Paradox

Long-term happiness improvement has no significant relationship with GDP per capita growth in developed, developing, and transition countries.

Money Does not Buy Happiness: Or Does It? A Reassessment Based on the Combined Effects of Wealth, Income and Consumption

Happiness is more affected by economic circumstances than previously believed, with wealth having a greater impact on life satisfaction than income, and non-durable consumption expenditures playing at least as important a role.

Poverty Is Low Consumption and Low Wealth, Not Just Low Income

An improved measure of financial poverty, considering household consumption and wealth, can provide more accurate estimates and help predict future poverty risks.

Happiness Quantified: A Satisfaction Calculus Approach

This book presents a new methodology for analyzing subjective satisfaction, aggregating satisfaction from various domains of life, to measure happiness and well-being.

Asking Consumption Questions in General Purpose Surveys

Adding specific recall questions to general purpose surveys can provide valuable information on household total expenditure.

Solutions Manual and Supplementary Materials for Econometric Analysis of Cross Section and Panel Data

This manual provides answers to selected problems, new examples, and supplementary materials for Econometric Analysis of Cross Section and Panel Data, enhancing the learning experience for students.

What Can Economists Learn from Happiness Research?

Happiness research provides valuable insights into economics, revealing that income, unemployment, and inflation affect happiness, while democracy and government decentralization influence life satisfaction.

Citations