Material Progress Makes People Happier
Justin Wolfers and Betsey Stevenson analyzed all the major post-war happiness studies data (.pdf file here), including new data from the Gallup World Poll, which contains detailed data on subjective well-being for 132 countries in 2006. Contrary to previous researchers using less complete date, they found that: 1) Rich people are happier than poor people. 2) Richer countries are happier than poorer countries. 3) As countries get richer, they tend to get happier.
The following chart takes the average levels of satisfaction reported on the Gallup Poll’s 0-10 scale, and plots it against G.D.P. per capita (note the log scale):
The correlation between average levels of happiness and average incomes is very high — greater than 0.8.
The relationship between happiness and log income appears nearly linear. Thus, a 10% rise in income in a rich country like the USA appears to increase happiness by about as much as a 10% rise in income in Burundi — in fact, the slope appears to get steeper above $15K!
A 10% rise in income in Burundi requires one-sixtieth as much income as a 10% rise in income in the USA. Thus, even if the slope is three times as steep for rich countries as poor countries (as Wolfers & Stevenson estimate), this still means than an extra $100 has about a twenty-times-greater effect on happiness in Burundi.
“The Economics of Happiness, Part 1 & Part 2,” by Justin Wolfers