6 Lessons from the Newest Research on Income and Well-Being
Fittingly or ironically, the dismal science has a lot to say about happiness.
The classic economic story about money and well-being goes something like this. Money buys happiness, sure, but only up to a point. Once basic needs are taken care of, extra money has diminishing (or non-existent) returns. Perhaps richer people use their money to move to richer areas, where they no longer feel rich. Perhaps relative income -- how much you have compared to your friends -- is matters much more thanabsolute income -- how much money you have, period.
Economists call it the "Easterlin Paradox." You call it the "Keeping Up With the Jones' Principle."
And a new research paper calls it total bunk. Or, in the economists' parlance, "based on empirical claims which are simply false." People with more money have higher reported well-being, they say, all the way up to the top 10 percent of earners. Here are the 6 most interesting observations from "The New Stylized Facts about Income and Subjective Well-Being," a discussion paper by Daniel W. Sacks, Betsey Stevenson, and Justin Wolfers.
(1) Richer countries are happier. Here's a simple graph to make a simple point. The researchers plotted 122 countries' responses to a Gallup World Poll on well-being against each nation's real GDP per capita (adjusted for purchasing power) and found a strong correlation.
Upshot: Well-being rises with income at all levels of income, across countries.
Read more at The Atlantic.
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