More Money, More Happy, Again

Here’s Betsey Stevenson and Justin Wolfers’ new paper [pdf] on happiness and economic growth. The bottom line:

The accumulation of more recent data (and a re-analysis of earlier data) suggests that the case for a link between economic development and happiness is quite robust. Moreover, we establish that the relationship between happiness and income within a country is similar to the relationship between happiness and national income across countries. Finally, we show that the within country relationship between economic growth and happiness is similar across countries.

And this effect shows up despite all the reasons — scale renorming, unbounded income scale vs. bounded happiness scale — that you would expect to flatten the trend. Taking the methodological considerations about surveys into account, the most reasonable conclusion is that these findings set the lower bound on the contribution of income to happiness.

The paper has all sorts of interesting findings from the Gallup World Poll that I have not seen. For example:

We next turn to a series of well-being questions contained in the Gallup World Poll. Respondents are asked to report whether they experienced “the following feeling during a lot of the day yesterday?” including enjoyment, physical pain, worry, sadness, boredom, depression, anger, and love. The middle panel of Table 4 shows that, among the positive emotions, the enjoyment-income gradient is positive and similar for both the between- and within-country estimates. More income is clearly associated with more people having enjoyment in their day. Love is less clearly related to income, although within-countries more income is associated with being more likely to experience love. Among the negative emotions, physical pain, boredom, depression, and anger all fall with rises in income, at both the national and individual level.

Beatles fans and headline writers please note relationship between income and love.

The final regressions analyze the relationship between income and some more specific experiences in people’s lives, such as feeling respected, smiling, doing interesting activities, feeling proud, and learning. Most of these assessments are related to one’s income in the within-country estimates. Fewer show signs of a similar sized effect when examining the relationship between countries. However, there are some notable exceptions. Wealthier people are more likely to say that felt that they were treated with respect yesterday and as countries get wealthier more people feel respected. Wealthier countries have people who report smiling more. This last measure is particularly interesting as smiling has been shown to be correlated with reported levels of happiness or life satisfaction. Indeed, in the data people who report smiling more, also report higher levels of life satisfaction. Finally, as countries get wealthier more people report having been able to eat good tasting food the previous day and the magnitude of the relationship is similar to that seen within countries.

All told, these alternative measures of well-being point to a robust relationship between rising
income and improvements in societal welfare.

MONEY IS GOOD FOR PEOPLE. I will continue to wait with bated breathe for conventional wisdom to catch up.

[HT: Zubin Jelvah]

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