Subjective Well-Being, Income, Economic Development and Growth Dan Sacks, Betsey Stevenson and...

Subjective Well-Being, Income, Economic Development and Growth

Dan Sacks, Betsey Stevenson and Justin WolfersWharton School, University of Pennsylvania and NBER

World Bank Workshop, NYU—October 8, 2010.

Subjective Well-being

Sacks, Stevenson & Wolfers, Income and Happiness 3

“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].”

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 findings

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

Between country:Rich v. poor countries

Statistically insignificant effects

interpreted to be zero

GDP<$15k:Strong effects

GDP>$15k: No effects

Strong effectsβbetween=0.35

National time series:Country when rich v. poor

No effects(Japan, USA, Europe)

No effects(Available data are for

rich countries)

Strong effectsβtime series=0.35

International panel:Countries with fast v. slow growth

Largely unexamined Largely unexamined Strong effectsβpanel=0.35

Implications Relative income determines well-

being

Relative income determines well-

being… once “basic needs” are met”

There’s no paradox(and never was)

Policy conclusions De-emphasize growth

Rich countries should de-emphasize growth and tax labor supply

“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.” – Richard Easterlin (2005)





New view: Stevenson-Wolfers findings










Strong effectsβbetween=0.35




rich countries)

Strong effectsβtime series=0.35


Largely unexamined Largely unexamined Strong effectsβpanel=0.35


being






“once a country has over $15,000 per head, its level of happiness appears to be independent of its income” – Richard Layard (2003)





New view: Stevenson-Wolfers










Strong effectsβbetween≈0.35




rich countries)

Strong effectsβtime series≈0.35


Largely unexamined Largely unexamined Strong effectsβpanel≈0.35


being







Why revisit the stylized facts?

1. Theoretical implications: Reference-dependent preferences

2. Yielding important policy implications (and big policy claims)

What explains our new findings?1. New data:

Longer time series (1946-2010); More countries (n=140)

2. Statistical inference: Absence of evidence v. evidence of absence

3. 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”

Outline: Assessing the Happiness-Income link


Within-country cross-sectional comparisons USA All countries

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 Japan Europe World Values Survey USA

Newly-available measures of subjective well-being

Within-Country Comparisons: USA


Family income Very happy Pretty happy Not too happy

<$12,500 (bottom 10%) 21% 53% 26%

$12,500-$49,999 25% 61% 13%

$50,000-$149,999 40% 54% 6%

$150,000 (top 10%) 53% 45% 2%

Source: U.S. General Social Survey, 2006

“Taken all together, how would you say things are these days?”

“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)

Well-Being and Log(Income)

Sacks, Stevenson & Wolfers, Income and Happiness

10

CHN

IND

USA

BRA

PAK

BGDNGA

RUS

JPN

MEX

PHL

VNM

DEU

EGY

TUR

ETH

IRNTHA

FRAGBR

ITA

KOR

UKR

COL

-1

-.5

0

.5

1

Nor

mal

ized

sat

isfa

ctio

n la

dder

sco

re

3

4

5

6

7

8S

atis

fact

ion

ladd

er s

core

(0-

10)

.5 1 2 4 8 16 32 64 128Annual household income ($000s; Log income scale)

Figure shows the central 90% of the income distribution for each country.

Lowess fits for the 25 Largest Countries; Gallup World PollSatisfaction and Log(Family Income)

βwithin ≈ 0.35

Source: Daniel Sacks, Betsey Stevenson and Justin Wolfers (2010), “Subjective Well-Being, Income, Economic Development and Growth”

Within-country : Rich are happier than poor

Without controls

With controls

Permanent Income

Adjusted

IV Sample size

Gallup World Poll: Ladder question

0.236***

(0.014)0.232***

(0.014)

0.422 0.449 ***

(0.027)171,900

(126 Countries)

World Values Survey:Life satisfaction

0.216***

(0.017)0.227***

(0.037)

0.413 0.26***

(0.035)

116,527(61

Countries)

Pew Global Attitudes Survey: Ladder question

0.281***

(0.027)0.283***

(0.027)

0.515 0.393***

(0.033)

32,463(43

Countries)


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.



Within-country comparisons USA All countries

Between countries: In past and current data Multiple datasets Both happiness and life satisfaction No evidence of satiation


βwithin ≈ 0.35

“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)


CANCANCAN

FRAFRAFRA

GBRGBRGBRUSAUSAUSA

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

.5 1 2 4 8 16 32

y = -9.96+1.14*ln(x) [se=0.31]Correlation=0.93

Gallup, 1946(Happiness)

AUSAUSAUS

DEUDEUDEU

FRAFRAFRA

GBRGBRGBR

ITAITAITAMEXMEXMEXNLDNLDNLD

NORNORNOR

USAUSAUSA

.5 1 2 4 8 16 32


Tension Study, 1948(Satisfaction)

AUSAUSAUS

CANCANCAN

FRAFRAFRA

GBRGBRGBRNLDNLDNLD

NORNORNORUSAUSAUSA

.5 1 2 4 8 16 32


Gallup, 1949(Happiness)

BRABRABRABRABRABRABRABRABRABRABRA

CUBCUBCUBCUBCUBCUBCUBCUBCUBCUBCUB

DEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEU

DOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOM

EGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGY

INDINDINDINDINDINDINDINDINDINDIND

ISRISRISRISRISRISRISRISRISRISRISRJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNNGANGANGANGANGANGANGANGANGANGANGA PANPANPANPANPANPANPANPANPANPANPAN

POLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOL

USAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSA

YUGYUGYUGYUGYUGYUGYUGYUGYUGYUGYUG

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

.5 1 2 4 8 16 32


Patterns of Human Concerns, 1960(Satisfaction ladder)

FRAFRAFRA

FRGFRGFRG

GBRGBRGBR

ITAITAITA

MYSMYSMYSPHLPHLPHLTHATHATHA

USAUSAUSA

.5 1 2 4 8 16 32


World Survey III, 1965(happiness)

Wel

l-be

ing

(Sta

ndar

dize

d in

dex)

Real GDP per capita (thousands of dollars, log scale)

13

Early Cross-National Studies of Well-Being and GDP

βbetween ≈ 0.35


AUS

BELCAN

DEU

DNK

ESPFRA

GBR

HUN

IRLISL

ITAJPN

KOR

MLTNLDNORSWEUSA

ARG

-1.5

-1.0

-0.5

0.0

0.5

1.0

3

4

5

6

7

8

9

.5 1 2 4 8 16 32


1981-84 wave

AUTBEL

BGRBLR

BRA

CAN

CHE

CZEDEU

DNK

ESP

EST

FIN

FRA

GBR

HUN

IRL ISL

ITA

JPNKOR

LTULVA

MLT

NLDNOR

POL

PRT

ROM

RUS

SVKSVN

SWE

TUR

USA

ARGCHLCHNIND MEXNGA ZAF

-1.5

-1.0

-0.5

0.0

0.5

1.0

3

4

5

6

7

8

9

.5 1 2 4 8 16 32


1989-93 wave

ALB

ARM

AUS

AZE

BGR

BIH

BLR

BRA

CHECOL

CZE

DEUESP

EST

FINGBR

GEO

HRVHUN

JPN

LTULVA

MDA

MEX

MKD

NORNZL

PERPHL

POL

PRI

ROMRUS

SCG

SLV

SVKSVN

SWE

TURTWN

UKR

URY

USA

VEN

ZAF

ARGBGD CHL

CHN

DOM

INDNGA

-1.5

-1.0

-0.5

0.0

0.5

1.0

3

4

5

6

7

8

9

.5 1 2 4 8 16 32


1994-99 wave

ALB

ARG

AUTBEL

BGDBGR

BIH

BLR

CAN

CHN

CZEDEU

DNK

DZA

ESP

EST

FIN

FRAGBR

GRCHRV

HUN

IDN

IND

IRL

IRN

IRQ

ISL

ISRITA

JOR

JPNKGZKOR

LTU

LUX

LVA

MAR

MDA

MEX

MKD

MLT

NGA

NLD

PAK

PERPHL

POL

PRI

PRT

ROM

RUS

SAU

SCG

SGP

SVK

SVNSWE

TUR

TZA

UGA

UKR

USAVEN

VNM

ZAF

ZWE

CHL

EGY

-1.5

-1.0

-0.5

0.0

0.5

1.0

3

4

5

6

7

8

9

.5 1 2 4 8 16 32


1999-2004 wave

Stan

dard

ized

sat

isfa

ctio

n la

dder

sco

re

Sati

sfac

tion

ladd

er s

core

(0-

10)

Real GDP per Capita (thousands of dollars, log scale)

World Values Survey βbetween ≈ 0.35


AGO

ARG

BGD

BGR

BOL

BRA

CAN

CHNCIV

CZE

DEUEGYFRAGBR

GHA

GTM

HND

IDN

IND

ITA

JOR

JPN

KEN

KOR

LBN

MEX

MLI

NGA

PAK

PERPHL POL

RUS

SEN SVK

TUR

TZAUGA

UKR

USA

UZB

VENVNM

ZAF

-1.0

-0.5

0.0

0.5

1.0

1.5

Stan

dard

ized

sat

isfa

ctio

n la

dder

sco

re

3

4

5

6

7

8

9Sa

tisf

acti

on la

dder

sco

re (

0-10

)

.5 1 2 4 8 16 32Real GDP per capita (thousands of dollars, log scale)


Pew Global Attitudes Survey, 2002βbetween ≈ 0.35


AFG

AGOALB

ARE

ARG

ARM

AUSAUT

AZE

BDI

BEL

BENBFA

BGD

BGR

BIH

BLRBOL

BRA

BWA

CANCHE

CHL

CHN

CMR

COL

CRI

CUB

CYPCZE DEU

DNK

DOMDZAECUEGY

ESP

EST

ETH

FIN

FRAGBR

GEO

GHA

GRCGTM

HKGHND

HRV

HTI

HUNIDN

IND

IRL

IRN

IRQ

ISR

ITA

JAMJOR

JPN

KAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LKA

LTU

LVAMARMDA

MDG

MEX

MKDMLI

MMRMNE

MOZ MRT

MWI

MYS

NER

NGANIC

NLDNOR

NPL

NZL

PAK

PAN

PERPHL

POL

PRI

PRT

PRYROMRUS

RWA

SAU

SEN

SGP

SLE

SLV

SRB

SVK

SVN

SWE

TCD

TGO

THA

TJK

TTO

TUR

TWN

TZAUGA

UKRUNK

URY

USA

UZB

VEN

VNM

YEM

ZAF

ZMB

ZWE

-1.0

-0.5

0.0

0.5

1.0

1.5

Stan

dard

ized

sat

isfa

ctio

n la

dder

sco

re

3

4

5

6

7

8

9 Sa

tisf

acti

on la

dder

sco

re (

0-10

)

0.5 1 2 4 8 16 32Real GDP per capita, (thousands of dollars, log scale)

y=-2.955+0.342*ln(x) [se=0.019]Correlation=0.82

Gallup World Pollβbetween ≈ 0.35


AFG

AGOALB

ARE

ARG

ARM

AUSAUT

AZE

BDI

BEL

BENBFA

BGD

BGR

BIH

BLRBOL

BRA

BWA

CANCHE

CHL

CHN

CMR

COL

CRI

CUB

CYPCZE DEU

DNK

DOMDZAECUEGY

ESP

EST

ETH

FIN

FRAGBR

GEO

GHA

GRCGTM

HKGHND

HRV

HTI

HUNIDN

IND

IRL

IRN

ISR

ITA

JAMJOR

JPN

KAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LKA

LTU

LVAMARMDA

MDG

MEX

MKDMLI

MMRMNE

MOZ MRT

MWI

MYS

NER

NGANIC

NLDNOR

NPL

NZL

PAK

PAN

PERPHL

POL

PRI

PRT

PRYROMRUS

RWA

SAU

SEN

SGP

SLE

SLV

SRB

SVK

SVN

SWE

TCD

TGO

THA

TJK

TTO

TUR

TWN

TZAUGA

UKRUNK

URY

USA

UZB

VEN

VNM

YEM

ZAF

ZMB

ZWE 3

4

5

6

7

8

9

Sati

sfac

tion

ladd

er s

core

(0-

10)

-1.0

-0.5

0.0

0.5

1.0

1.5

Stan

dard

ized

sat

isfa

ctio

n la

dder

sco

re

.5 1 2 4 8 16 32Real GDP per capita (thousands of dollars, log scale)

Country-year aggregates

Within-country wellbeing gradient

Between-country wellbeing gradient

Comparing Within and Between Country Estimates

βbetween ≈ βwithin ≈ 0.35




Between countries: Through time Multiple datasets Both happiness and life satisfaction No evidence of satiation


βwithin ≈ 0.35

βbetween ≈ 0.35

“income growth in a society does not increase happiness”. - Easterlin (1995)

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

Stevenson and Wolfers, Subjective Well-Being 21Source: Betsey Stevenson and Justin Wolfers (2010), “Time Series Evidence on the Well-Being Link”

Stevenson and Wolfers, Subjective Well-Being

-0.50

-0.25

0.00

0.25

0.50

y = 2.53 + -0.25 * log(GDP) [se=0.14]Correlation = -0.31

Belgium

y = -3.63 + 0.36 * log(GDP) [se=0.05]Correlation = 0.73

Denmark


Greece

-0.50

-0.25

0.00

0.25

0.50


France


Ireland


Italy

-0.50

-0.25

0.00

0.25

0.50

8 16 32


Netherlands

8 16 32


United Kingdom

8 16 32


West Germany

Lif

e Sa

tisf

acti

on, 0

-10

Scal

e

Real GDP per capita (thousands of dollars, log scale)26βtime series ≈ 0.35

Change in Life Satisfaction and Economic Growth in Europe


-0.4

-0.2

0.0

0.2

0.4N

orm

aliz

ed s

atis

fact

ion,

rel

ativ

e to

cou

ntry

and

wav

e fi

xed

effe

cts

-.5 -.25 0 .25 .5Log GDP, relative to country and wave fixed effects

y = 0.51*ln(x) [se=0.13]Correlation=0.55

28

International Panel Data: World Values Surveyβpanel ≈ 0.35

Satisfaction and Growth: International Panel Regressions


World Values Survey Eurobarometer All Countries Transition

Countries Non-transition

Countries All Countries

Panel A: Panel Regressions 𝑳𝒊𝒇𝒆 𝑺𝒂𝒕𝒊𝒔𝒇𝒂𝒄𝒕𝒊𝒐𝒏𝒄𝒕 = 𝜷 𝒍𝒐𝒈ሺ𝑮𝑫𝑷𝒄𝒕ሻ+ 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝒂𝒏𝒅 𝒘𝒂𝒗𝒆 𝒇𝒊𝒙𝒆𝒅 𝒆𝒇𝒇𝒆𝒄𝒕𝒔 ln(GDP) 0.505***

(0.109) 0.638**

(0.239) 0.407***

(0.116) 0.170**

(0.074) N 166 observations

79 countries

31 observations 10 countries



Panel B: Long differences 𝚫𝑳𝒊𝒇𝒆 𝑺𝒂𝒕𝒊𝒔𝒇𝒂𝒄𝒕𝒊𝒐𝒏𝒄,𝒕 = 𝜷 𝚫𝒍𝒐𝒈ሺ𝑮𝑫𝑷𝒄𝒕ሻ ln(GDP) 0.47***

(0.128) 0.694*

(0.387) 0.35**

(0.163) 0.278*

(0.164) N 66 differences

10 differences 46 differences 30 differences

βpanel ≈ 0.35


ALB

AUS

AUT

BEL

BGR

BIH

BLR

BRA

CAN

CHE

CZE

DEU

DNK

ESP

EST

FIN

FRA

GBR

HRV

HUN

IRL

ISL

ITA

JPN

LTU

LVA

MDA

MEX

MKD

MLT

NLD

NOR

PER

PHL

POL

PRI

PRT

ROMRUS

SCG

SVK

SVN

SWE

TUR

UKR

USA

VEN

ZAF

KORKOR Offscale(1, 0.33)

-0.6

-0.4

-0.2

0.0

0.2

0.4

Cha

nge

in s

atis

fact

ion,

rel

ativ

e to

cou

ntry

and

wav

e fi

xed

effe

cts

-.5 -.25 0 .25 .5Change in log GDP, relative to country and wave fixed effects

y = 0.00+0.47*ln(x) [se=0.14]Correlation=0.54

31

Long Differences: World Values Survey

βpanel ≈ 0.35

Conclusion: Stylized Facts about Well-being and Income



Between countries: Since 1946 Multiple datasets Both happiness and life satisfaction No evidence of satiation

National Time Series Japan USA 9 European nations

International Panel data World Values Survey Eurobarometer

Other measures of well-being Pain, depression, smiling, good tasting food to eat, respect

βwithin ≈ 0.35

βbetween ≈ 0.35

βinternational panel≈ 0.35

βtime series ≈ 0.35

Is there any evidence of satiation?

Sacks, Stevenson and Wolfers, Subjective Well-Being 34

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

“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)


ALB

ARG

AUTBEL

BGD

BGR

BIH

BLR

CAN

CHNCZE

DEU

DNK

DZA

ESP

EST

FINFRA

GRCHRVHUN

IDN

IND

IRL

IRN

IRQ

ISL

ISRITAJOR

JPN

KGZKOR

LTU

LUX

LVA

MAR

MDA

MEX

MKD

MLT

NLD

PAK PER

PHL

POL

PRI

PRT

ROMRUS

SAU

SCG

SGP

SVK

SVN

SWE

TUR

UGA

UKR

USA

VENVNM

ZAF

ZWE

CHL

EGY

NGATZA

-1.0

-0.5

0.0

0.5

1.0

Stan

dard

ized

hap

pine

ss

2

3

4H

appi

ness

(1-

4 S

cale

)

.5 1 2 4 8 16 32GDP (log scale)


Excluding NGA and TZA: y = -1.70+0.20*ln(x) [se=0.04]Correlation=0.49

36

Happiness and GDP (World Values Survey)

Stevenson and Wolfers, Subjective Well-Being 41

AFG

AGO

ALB

ARE

ARG

ARM

AUSAUT

AZE

BDI

BEL

BEN

BFA

BGD

BGR

BIH

BLR

BLZBOL

BRA

BWACAF

CAN

CHE

CHL

CHN

CMR

CODCOG

COL

CRICYP

CZE DEU

DJI

DNK

DOM

DZA

ECU

EGY ESP

EST

ETH

FIN

FRA

GBR

GEO

GHA

GINGRC

GTM

GUY

HKG

HND

HRV

HTI

HUN

IDN

IND

IRL

IRN

ISR

ITA

JAM

JORJPN

KAZ

KEN

KGZ

KHM

KOR

KWTLAO

LBN

LBR

LKA

LTU

LVA

MAR

MDAMDG

MEX

MKD

MLI

MMR

MNG

MOZ

MRT

MWI

MYS

NAMNER NGANIC

NLDNOR

NPL

NZL

PAK

PAN

PER

PHL

POL

PRT

PRY

ROU

RUSRWA

SAU

SDN

SEN SGP

SLE

SLV

SRB

SVK

SVN

SWE

SYRTCD

TGO

THA

TJK

TTO

TUN

TUR

TWN

TZA

UGAUKR

URY

UZB VEN

VNM

YEM

ZAF

ZMB

ZWE

USA

0.40

0.50

0.60

0.70

0.80

0.90

Pro

port

ion

who

exp

erie

nced

this

fee

ling

duri

ng a

lot o

f th

e da

y ye

ster

day

.25 .5 1 2 4 8 16 32 64Real GDP per Capita at PPP ($000s, log scale)

Correlation = 0.49

Enjoyment

42Stevenson and Wolfers, Subjective Well-Being

AFG

AGO

ALB

ARE

ARG

ARM

AUS

AUT

AZE

BDI

BEL

BEN

BFA

BGD

BGR

BIHBLR

BLZ

BOL

BRA

BWA

CAFCAN

CHE

CHL

CHN

CMR

COD

COGCOL

CRI

CYP

CZE

DEU

DJI

DNK

DOMDZA

ECU

EGY

ESP

EST

ETH

FINFRA

GBR

GEO

GHAGIN

GRC

GTMGUY

HKGHND

HRV

HTI

HUN

IDN

IND

IRL

IRN

ISRITA

JAM

JORJPN

KAZ

KENKGZ

KHM

KOR

KWT

LAO

LBNLBR

LKALTULVA

MAR

MDA

MDGMEX

MKD

MLIMMR

MNGMOZ

MRT

MWIMYSNAM

NER

NGA

NIC

NLD

NOR

NPL

NZL

PAK

PAN

PER

PHL

POL

PRT

PRY

ROU RUS

RWA

SAU

SDN

SEN

SGP

SLE

SLV

SRB

SVK

SVN

SWE

SYR

TCD

TGO

THA

TJKTTOTUN

TUR

TWN

TZA

UGA

UKRURY

UZB

VENVNM

YEM

ZAF

ZMB

ZWE

USA

0.00

0.10

0.20

0.30

0.40

Pro

port

ion

who

exp

erie

nced

this

fee

ling

duri

ng a

lot o

f th

e da

y ye

ster

day


Correlation = 0.29

Depression


AFGAGO

AREARG

ARM

AUS

AUT

AZE

BDI

BEL

BEN

BFA

BGD

BLR

BLZBOL

BRABWA

CAN

CHECHL

CHN

CMR

COG

COLCRI

CYP

CZE

DEU

DJI

DNK

DOM

DZA

ECUEGY

ESP

ESTETH FIN

FRAGBR

GEO

GHA

GRC

GTM

GUY HKG

HND

HTI

HUN

IDN

INDIRL

IRN

ISRITA

JAM

JOR JPN

KAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LBR

LKA

LTU

LVA

MDA

MDGMEX

MLIMMR MNG

MOZ

MRT

MWIMYS

NER

NGANIC

NLD

NOR

NPL

NZL

PAK PAN

PER

PHL

POL

PRT

PRY

ROU

RUS

RWA

SAU

SEN

SGPSLE

SLV

SVK

SVNSWE

SYR

TCDTGO

THA

TJK

TTO

TUNTUR

TWN

TZAUGA

UKR

URY

UZB

VEN

VNM

YEM ZAF

ZMB

ZWE

USA

0.00

0.20

0.40

0.60

0.80

Pro

port

ion

who

exp

erie

nced

this

fee

ling

duri

ng a

lot o

f th

e da

y ye

ster

day


Correlation = 0.33

Stress


AFGAGO

ALB

AREARG

ARMAUSAUT

AZE

BDI

BEL

BEN

BFA

BGD

BGR

BIH

BLRBLZ

BOL

BRA

BWA

CAF

CAN

CHECHL

CHN

CMRCOD COG

COLCRI

CYP

CZE

DEU

DJI

DNKDOM

DZA

ECUEGY

ESP

EST

ETH

FINFRA

GBR

GEO

GHAGINGRC

GTM

GUY

HKG

HND

HRV

HTI

HUNIDN

IND

IRL

IRN

ISR

ITA

JAM

JOR

JPN

KAZKENKGZ

KHM

KOR

KWT

LAO

LBN

LBR

LKA LTU

LVAMAR

MDAMDG

MEX

MKD

MLI

MMR

MNG

MOZMRT

MWI

MYS

NAM

NER

NGA

NICNLD

NOR

NPL

NZL

PAK

PANPERPHL

POLPRTPRY

ROU RUS

RWA

SAU

SDNSEN

SGP

SLE

SLV

SRB SVK

SVNSWE

SYR

TCD

TGOTHA

TJK

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URYUZB

VEN

VNM

YEM

ZAFZMB

ZWE

USA

0.50

0.60

0.70

0.80

0.90

1.00

Pro

port

ion

agre

eing


Correlation = 0.46

Were you treated with respect all day yesterday?


AFGAGO

ALB

ARE

ARG

ARM

AUS

AUT

AZE

BDI

BEL

BEN

BFA

BGD

BGRBIH

BLR

BLZ

BOL

BRA

BWACAF

CAN

CHE

CHL

CHN

CMRCOD

COL

CRICYP

CZEDEU

DNK

DOM

ECUEGY ESP

EST

ETH

FIN

FRA

GBR

GEO

GHA

GINGRC

GTM

GUY

HKG

HND

HRV

HTI

HUN

IDN

IND

IRL

IRN

ISR

ITAJAM

JORJPN

KAZ

KEN

KGZ

KHM

KOR

KWTLAO

LBN

LBR

LKA

LTU

LVA

MARMDA

MDG

MEX

MKD

MLI

MMR

MNG

MOZ

MRT

MWI

MYSNAM

NER

NGA

NIC

NLD

NOR

NPL

NZL

PAK

PAN

PER

PHL

POL

PRT

PRY

ROU

RUS

RWA

SAUSDN

SEN

SGP

SLE

SLV

SRB SVKSVN

SWE

TCD

TGO

THA

TJK

TTO

TUR

TWN

TZA

UGA

UKR

URYUZB

VEN

VNM

YEM

ZAF

ZMBZWE

USA

0.40

0.60

0.80

1.00

Pro

port

ion

agre

eing


Correlation = 0.60

Did you have good tasting food to eat yesterday?


AFG

AGO

ALB

ARE

ARG

ARM

AUSAUT

AZE

BDI

BEL

BENBFA

BGD BGRBIH

BLR

BLZBOL

BRA

BWA

CAF

CAN

CHECHLCHN

CMR

COD

COG

COL

CRI

CYP

CZE

DEUDJI

DNKDOM

DZA

ECU

EGY

ESP

ESTETH

FIN

FRAGBR

GEO

GHA

GIN

GRC

GTM

GUY

HKG

HND

HRV

HTIHUN

IDN

IND

IRL

IRN

ISRITA

JAM

JOR

JPN

KAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LBR

LKA

LTULVA

MAR

MDA

MDG

MEX

MKD

MLI

MMR

MNG

MOZ

MRT

MWI

MYS

NAM

NER

NGANIC

NLDNOR

NPL

NZL

PAK

PAN

PER

PHL

POL

PRT

PRY

ROU RUS

RWA

SAU

SDN

SEN SGPSLE

SLV

SRB

SVKSVN

SWE

SYR

TCD

TGO

THA

TJK

TTO

TUNTUR

TWN

TZA

UGA

UKR

URY

UZB

VEN

VNM

YEM

ZAF

ZMB

ZWE

USA

0.40

0.50

0.60

0.70

0.80

0.90

Pro

port

ion

agre

eing


Correlation = 0.29

Did you smile or laugh a lot yesterday?


AFG

AGO

ALB

ARE

ARG

ARM

AUSAUT

AZE

BDI

BEL

BEN

BFA

BGD

BGRBIH

BLR

BLZ

BOLBRA

BWA

CAF

CANCHECHL

CHN

CMRCOD

COG

COL

CRI

CYP

CZE

DEU

DJI

DNK

DOM

DZA

ECU

EGY

ESP

EST

ETH

FIN

FRA

GBR

GEO

GHA

GIN

GRC

GTM

GUY HKG

HND

HRV

HTI

HUN

IDN

IND

IRL

IRN

ISR

ITA

JAM

JOR

JPNKAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LBR

LKA LTU

LVA

MARMDA

MDG

MEX

MKD

MLI

MMR MNG

MOZ

MRT

MWI

MYSNAM

NER NGA

NIC

NLDNORNPL

NZL

PAKPAN

PER

PHL

POL

PRT

PRY

ROU

RUSRWA

SAU

SDN

SEN

SGP

SLE

SLV

SRB

SVK

SVN

SWE

SYR

TCD

TGO

THATJK

TTO

TUN

TURTWN

TZA

UGAUKR

URY

UZBVEN

VNM

YEM

ZAF

ZMB

ZWE

USA

0.40

0.50

0.60

0.70

0.80

0.90

Pro

port

ion

agre

eing


Correlation = 0.21

Would you like to have more days just like yesterday?


AFG

AGO

ALB

ARE

ARG

ARM

AUS

AUT

AZE

BDI

BEL

BEN

BFA

BGD BGR

BIH

BLR

BLZBOL

BRA

BWA

CAF

CAN

CHE

CHL

CHN

CMR

COD

COL

CRI

CYP

CZEDEUDNK

DOM

DZA

ECU

EGY

ESP

EST

ETH

FINFRA

GBR

GEO

GHA

GIN

GRC

GTM

GUY

HKG

HND

HRV

HTI

HUN

IDN

IND

IRL

IRN

ISR

ITAJAM

JOR

JPNKAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LBR

LKALTU

LVA

MAR

MDA

MDG

MEXMKD

MLI

MMR

MNG

MOZ

MRT

MWI

MYS

NAM

NER

NGA

NIC

NLD

NOR

NPL

NZLPAK

PAN

PER

PHL

POL

PRT

PRY

ROU

RUS

RWA

SAU

SDN

SEN

SGP

SLESLV

SRB

SVK

SVN

SWE

SYR

TCD

TGO

THA

TJK

TTO

TUN

TUR

TWNTZA

UGA

UKRURY

UZBVEN

VNM

YEM

ZAFZMB

ZWE

USA

0.10

0.20

0.30

0.40

0.50

Pro

port

ion

who

exp

erie

nced

this

fee

ling

duri

ng a

lot o

f th

e da

y ye

ster

day


Correlation = 0.11

Boredom


AFG

AGO

ALB ARE

ARG

ARM

AUS

AUT

AZEBDI

BEL

BEN

BFA

BGD BGR

BIH

BLR

BLZ

BOL

BRA

BWA

CAF

CANCHE

CHL

CHN

CMR

COD

COGCOL

CRI CYP

CZEDEU

DJI

DNK

DOM

DZA

ECUEGY

ESPESTETH

FIN

FRA

GBRGEO

GHA

GIN

GRC

GTMGUY

HKG

HND

HRV

HTI

HUN

IDNIND

IRL

IRN

ISRITA

JAMJOR

JPN

KAZ

KENKGZ

KHM

KOR KWT

LAO

LBN

LBR

LKA

LTU

LVA

MAR

MDA

MDG

MEX

MKD

MLI

MMR

MNG

MOZ

MRT

MWI

MYSNAM

NER NGA

NIC

NLDNOR

NPL

NZL

PAK

PAN

PERPHL

POL

PRT

PRY

ROU

RUS

RWA

SAU

SDN

SEN

SGP

SLE

SLV

SRBSVK

SVN

SWE

SYR

TCD

TGO

THA

TJKTTO

TUN

TUR

TWN

TZAUGA

UKRURY

UZB VEN

VNM

YEM

ZAFZMB

ZWE

USA

0.00

0.10

0.20

0.30

0.40

Pro

port

ion

who

exp

erie

nced

this

fee

ling

duri

ng a

lot o

f th

e da

y ye

ster

day


Correlation = 0.15

Sadness


AFG

AGO

ALB

AREARG

ARM

AUS

AUT

AZE

BDI

BEL

BENBFA

BGD BGR

BIH

BLR

BLZBOL

BRA BWA

CAF

CANCHE

CHL

CHN

CMRCOD

COG

COLCRI

CYP

CZE

DEU

DJI

DNKDOM

DZA

ECUEGY

ESP

EST

ETH

FIN

FRAGBR

GEO

GHAGIN

GRC

GTM

GUY

HKGHND

HRVHTI

HUN

IDN

IND

IRL

IRN ISRITA

JAM

JOR

JPN

KAZ

KEN

KGZKHM

KOR

KWT

LAO

LBN

LBR LKA

LTULVA

MAR

MDA

MDG

MEX

MKD

MLI

MMR

MNG

MOZ

MRT

MWI

MYS

NAM

NER

NGANICNLD

NOR

NPL

NZL

PAK

PAN

PER

PHL

POL

PRT

PRY

ROU RUS

RWA

SAUSDNSEN

SGP

SLE

SLV

SRB

SVK

SVN

SWE

SYR

TCD

TGO

THA

TJK

TTOTUN

TUR

TWN

TZA

UGA

UKR

URYUZB

VEN

VNM

YEM

ZAF

ZMB

ZWE

USA

0.40

0.50

0.60

0.70

0.80

0.90

Pro

port

ion

agre

eing


Correlation = 0.14

Did you feel well rested yesterday?


AFG AGOALB

AREARG

ARM

AUSAUT

AZE

BDI

BEL

BEN

BFA

BGD

BGR

BIH

BLR

BLZBOL

BRA

BWA

CAF

CAN

CHECHL

CHN

CMR

COD

COL

CRICYP

CZE

DEU

DNKDOM

ECU

EGY

ESP

EST

ETH

FINFRAGBR

GEO

GHA

GIN

GRC

GTM

GUY

HKG

HNDHRVHTI

HUN

IDN

INDIRL

IRNISR

ITAJAM

JOR

JPN

KAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LBR

LKA

LTULVA

MARMDA

MDGMEX

MKD

MLI

MMR

MNG

MOZ

MRT

MWI

MYS

NAM

NER

NGA

NIC

NLD

NOR

NPL

NZL

PAKPAN

PER

PHL

POL

PRT

PRY

ROU

RUS

RWA

SAU

SDN

SENSGP

SLESLV SRB

SVK

SVN

SWE

TCD

TGO

THA

TJK

TTO

TUR

TWN

TZA

UGA

UKR

URY

UZB

VENVNM

YEM

ZAFZMBZWE

USA

0.20

0.40

0.60

0.80

1.00

Pro

port

ion

who

exp

erie

nced

this

fee

ling

duri

ng a

lot o

f th

e da

y ye

ster

day


Correlation = 0.19

Love


AFG

AGO

ALB

ARE

ARGARM

AUS

AUT

AZE

BDI BEL

BENBFA

BGD

BGR

BIHBLR

BLZ

BOL

BRA

BWA

CAF

CAN

CHE

CHL

CHN

CMR

COD

COG

COLCRICYP

CZE DEUDJI DNK

DOM

DZA

ECU

EGY

ESP

EST

ETH

FIN

FRA

GBR

GEOGHA

GIN

GRCGTM

GUY

HKG

HNDHRV

HTI

HUN

IDN

IND

IRL

IRN

ISR

ITA

JAM

JOR

JPN

KAZ

KEN

KGZ

KHM

KOR

KWT

LAO

LBN

LBR

LKA

LTULVA

MAR

MDA

MDG

MEX

MKD

MLIMMR

MNG

MOZMRT

MWI

MYSNAM

NER

NGA

NIC

NLDNOR

NPL NZL

PAK

PAN

PER

PHL

POL

PRT

PRY

ROU

RUS

RWA

SAU

SDNSEN

SGP

SLE

SLV

SRBSVK

SVN

SWE

SYR

TCD

TGO

THA

TJK

TTO

TUN

TUR

TWN

TZAUGA

UKR URY

UZB

VEN

VNM

YEM

ZAFZMB

ZWE

USA

0.10

0.20

0.30

0.40

0.50

Pro

port

ion

who

exp

erie

nced

this

fee

ling

duri

ng a

lot o

f th

e da

y ye

ster

day


Correlation = 0.39

Physical Pain

Source: Alan Krueger, Betsey Stevenson and Justin Wolfers, “A World of Pain”.

A Global Map of Pain


Proportion of populationexperiencing pain[0.00,0.05] (0)(0.05,0.10] (1)(0.10,0.15] (4)(0.15,0.20] (22)(0.20,0.25] (65)(0.25,0.30] (49)(0.30,0.35] (34)(0.35,0.40] (13)(0.40,0.45] (5)(0.45,0.50] (2)(0.50,0.55] (1)No data (56)

Did you experience the following feelings during a lot of the day yesterday? How about physical pain?

Global Map of Pain

Source: Alan Krueger, Betsey Stevenson and Justin Wolfers, “A World of Pain”.


Blank slide: End of talk

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)

Subjective Well-Being and the Business Cycle


-2

-1

0

1

2

3

4

Une

mpl

oym

ent r

ate

- N

atur

al R

ate

Sca

le r

ever

sed

-0.15

-0.10

-0.05

0.00

0.05

0.10

Sta

ndar

dize

d ha

ppin

ess

inde

x

1970 1980 1990 2000 2010

Happiness

Unemployment, relative to NAIRU (right axis; inverse scale)

Correlation = -0.45Business Cycle and Happiness, U.S.

New Opportunity: Daily Data


Happiness in the United States

-.2

0

.2

.4

Hap

pine

ss%

>m

edia

n ha

ppin

ess

/ Est

imat

ed h

appi

ness

inde

x

1970 1980 1990 2000 2010

%>Median Happiness: Women Men

Ordered probit index: Women Men Difference

Source: General Social Survey

Happiness in the United States

65Sacks, Stevenson & Wolfers, Income and Happiness

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:

𝑊𝑒𝑙𝑙 − 𝑏𝑒𝑖𝑛𝑔തതതതതതതതതതതതതതതതതത𝑐 = 𝛼+ 𝛽logሺ𝑦ሻതതതതതതതത𝑐 + 𝜖𝑐

𝑊𝑒𝑙𝑙 − 𝑏𝑒𝑖𝑛𝑔𝑖𝑐 = 𝛼+ 𝛽logሺ𝑦𝑖𝑐ሻ+ 𝜖𝑖𝑐

𝑊𝑒𝑙𝑙 − 𝑏𝑒𝑖𝑛𝑔തതതതതതതതതതതതതതതതതത𝑐 = 𝛼+ 𝛽log൫𝑦𝑐൯− 𝛽ቀlog൫𝑦𝑐൯− logሺ𝑦ሻ𝑐ቁᇣᇧᇧᇧᇧᇧᇤᇧᇧᇧᇧᇧᇥMeanlogdeviation + 𝜖𝑐

Average of log income, not

Log of average income

Equal andopposite effects

Conditional Relationship Between GDP & MLD


AGOALB

ARG

ARM

AUSAUT

AZE

BDI BEL

BEN

BFA

BGD

BGR

BIHBLR

BOLBRA

BWA

CAFCANCHE

CHLCHN

CIVCMR

COD

COG

COL

COM

CRI

CZEDEU

DJI

DNK

DOMDZA ECUEGY

ESP

EST

ETH

FIN

FRAGBR

GEO

GHAGIN

GRC

GTMGUY

HKG

HND

HRVHTI

HUN

IDNIND

IRL

IRN

ISR

ITA

JAMJOR

JPNKAZ KEN

KGZ

KHMKOR

LAO LBR

LKA

LTULUX

LVA

MAR

MDAMDG

MEX

MKD

MLIMNG

MOZ

MRT

MWIMYS

NAM

NERNGA NIC

NLDNOR NPL

NZL

PAK

PAN

PERPHLPOL

PRT

PRY

ROURUS

RWASENSGPSLE

SLV

SVKSVN

SWE

TCD

TGO

THATJKTKM

TTOTUN

TUR

TZAUGA

UKRURY

USAUZBVEN

VNM

YEMZAF

ZMB

ZWE

-2.0

-1.0

0.0

1.0

2.0

Sat

isfa

ctio

nE

[Sta

ndar

dize

d sa

tisfa

ctio

n | L

og G

DP

]

-0.4 -0.2 0.0 0.2 0.4 0.6 0.8Inequality: E[Mean log deviation | Log GDP]

(World Bank Inequality Data)

Satisfaction = 0.30*log GDP (se=0.02) -0.22*inequality (se=0.14)

Satisfaction and Inequality, Conditional on Log GDP

Source: Betsey Stevenson and Justin Wolfers, “Inequality and Subjective Well-Being”.

Distribution of Log GDP and Inequalty


05

1015202530

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$.25k $.5

k$1

k$2

k$4

k$8

k$1

6k$3

2k$6

4k

$128

k

-4 -3 -2 -1 0 1 2 3 4

Log GDP per Capita: SD=1.34

05

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quen

cy

-4 -3 -2 -1 0 1 2 3 4

*Bars are 1/20th as wide

Inequality: Mean Log Deviation (Gallup measure): SD=0.16

05

1015202530

Fre

quen

cy

-4 -3 -2 -1 0 1 2 3 4

*Bars are 1/20th as wide

Inequality: Mean Log Deviation | Log GDP: SD=0.14

Fre

quen

cy; N

umbe

r of

cou

ntri

es

Variation around the mean; Log points

Variation in Log GDP and Mean Log Deviation

Source: Betsey Stevenson and Justin Wolfers, “Inequality and Subjective Well-Being”.

Aggregate Happiness Trends: Comparing Dist’ns


-0.40

-0.20

0.00

0.20

De-

Mea

ned

Lev

el o

f H

appi

ness

Uni

ts:

Cro

ss-s

ecti

onal

SD

(hap

pin

ess)

1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Normal Logistic Uniform

Assuming that the distribution of happiness is:

Average Happiness

0.80

1.20

1.40

1.00

Var

ianc

e o

f h

app

ines

sR

elat

ive

to a

vera

ge l

evel

in

sam

ple

1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Happiness Inequality

Trends in the Distribution of U.S. Happiness


-0.75

-0.50

-0.25

0.00

0.25

College grads Some college

High school <High school

Education

Men Women

GenderWhite Non-white

Race

-0.75

-0.50

-0.25

0.00

0.25

1970 1980 1990 2000 2010

18-34 yrs 35-49 yrs 50+ yrs

Age Group

1970 1980 1990 2000 2010

Married Unmarried

Marital Status

1970 1980 1990 2000 2010

Northeast Midwest

South West

Region

Est

imat

ed a

s A

vera

ge H

appi

ness

= G

roup

*Yea

r F

ixed

Eff

ects

Ave

rage

Hap

pine

ss L

evel

sTrends in Average Levels of Happiness Between Groups

Subjective Well-Being, Income, Economic Development and Growth Dan Sacks, Betsey Stevenson and...

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