Is a Country’s Aggregate Income Related to Its Level of Happiness?

Alexis Crispin, Fort Hays State University

Description

The Easterlin paradox suggests that a greater level of economic prosperity does not translate into more happiness for a society. We investigate this paradox using a methodology new to this literature called quantile regression (QR) analysis. We find evidence that aggregate income is statistically related to a nation’s average level of happiness, but (i) the magnitude of this relationship is relatively modest, and (ii) greater levels of income bring about smaller and smaller increases in a nation’s happiness. These results provide a more nuanced understanding of the empirical support for and against the Easterlin paradox.

 

Is a Country’s Aggregate Income Related to Its Level of Happiness?

The Easterlin paradox suggests that a greater level of economic prosperity does not translate into more happiness for a society. We investigate this paradox using a methodology new to this literature called quantile regression (QR) analysis. We find evidence that aggregate income is statistically related to a nation’s average level of happiness, but (i) the magnitude of this relationship is relatively modest, and (ii) greater levels of income bring about smaller and smaller increases in a nation’s happiness. These results provide a more nuanced understanding of the empirical support for and against the Easterlin paradox.