The Easterlin paradox worldwide

Abstract

The Easterlin paradox states that, although richer people report higher levels of well-being within one country, no such relationship exists across countries or over time. Several authors disagree and claim a robust positive relationship. A percentage increase of income always leads to higher well-being. This article reassesses the relationship, but analyses regional differences. I find that the positive relationship is strong in Eastern Europe, the Middle East and North African countries and Latin America. The relationship is not significant in Western Europe and Asia. In North America/Oceania and Sub-Saharan Africa, the marginal effect even becomes negative. Materialistic attitudes or the degree of collectivism may serve as explanations for the findings.

Keywords:

• Easterlin paradox
• life satisfaction
• regional differences

JEL Classification:

• I31
• O11
• Z13

Notes

¹ Stevenson and Wolfers (2008) reported that some observations have to be excluded because of nonrepresentative country samples.