Saturday, 8 March 2008

Happy and/or rich?

Back in 1974 Richard Easterlin noted that average national happiness does not increase over long spans of time, despite large increases in per-capita income. Since then the debate about the relationship between happiness and income has raged. Happy and/or rich?

Now at the Gallup website we find Angus Deaton's latest summary of his happiness findings. The important graph is this one:As Deaton explains,
As the graph indicates, life satisfaction is higher in countries with higher GDP per head. The slope is steepest among the poorest countries, where income gains are associated with the largest increases in life satisfaction, but it remains positive and substantial even among the rich countries; it is not true that there is some critical level of GDP per capita above which income has no further effect on life satisfaction. Instead, each doubling of income adds about the same amount to life satisfaction, across poor and rich countries alike.

In fact, a global map of average life satisfaction levels by country based on the Gallup World Poll data looks much the same as an income map of the world: the inhabitants of North America, Western Europe, Japan, Australasia, and Saudi Arabia are rich and well-satisfied with their lives, with average national life satisfaction scores in the range of 7.5- 8.5. The really unsatisfied places on the planet, with life satisfaction scores in the range of 3.1- 4.5, are in sub-Saharan Africa, plus Haiti and Cambodia.
Deaton then goes on to look at why life satisfaction should be so closely related to national incomes. His answer,
A simpler interpretation of the Gallup World Poll findings is that when asked to imagine the best and worst possible lives for themselves, points 10 and 0 on the scale, people use a global standard. Danes understand how bad life is in Togo and other poor places, and the Togolese, through television and newspapers, understand how good life is in Denmark or other high-income countries.
(HT: Will Wilkinson)

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