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A reassessment of the relationship between GDP and life satisfaction
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Proto, Eugenio and Rustichini, Aldo (2012) A reassessment of the relationship between GDP and life satisfaction. Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2012 (Number 94).
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Text (Working paper)
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
Determining the relation between life satisfaction and aggregate income at
country level has been problematic, because cross-country and times-series analysis generally
give different conclusions. Here we analyze this relation without imposing any polynomial
structure to the estimated model and eliminating potentially confounding country-specific factors.
We show the existence of a bliss point in the interval between 26,000$ and 30,000$ (2005
in PPP) in relationship between individual life satisfaction and GDP. An almost identical result
is found when the relationship between aggregate income of Western European regions
and life satisfaction of their residents is analyzed: in this case, data suggest a bliss point between
30,000$ and 33,000$. In both samples, we find first evidence of a decreasing level of
life satisfaction after the bliss points. Therefore, the analysis overall shows the existence of an
hump-shaped pattern between GDP and life satisfaction.
We discuss possible explanations of the hump-shaped pattern linked to external effects
of the aggregate income on life satisfaction due, for example, to habit formation and income
comparison and present an econometric test of this potential explanation based on some recent
findings of the ve-factor personality theory.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HB Economic Theory |
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Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Gross domestic product , Satisfaction, Income, Personality | ||||
Series Name: | CAGE Online Working Paper Series | ||||
Publisher: | Department of Economics, University of Warwick | ||||
Place of Publication: | Coventry, UK | ||||
Official Date: | August 2012 | ||||
Dates: |
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Volume: | Volume 2012 | ||||
Number: | Number 94 | ||||
Number of Pages: | 26 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Date of first compliant deposit: | 1 August 2016 | ||||
Date of first compliant Open Access: | 1 August 2016 | ||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC), National Science Foundation (U.S.) (NSF) | ||||
Grant number: | RES-074-27-0018, RES-062-23-1385 (ESRC) ; SES-0924896 (NSF) |
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