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Well-Being

Aside from avoiding premature death, people have material and social needs to live prosperous lives. Life satisfaction is a measure of well-being that asks people to rate their overall satisfaction with life on a scale from 0 to 10 1. Life events and changes have been estimated to have the following impacts on life satisfaction.

The image: "event_satisfaction.svg" cannot be found!

Increases in air pollution compare to safe standards of 150 micrograms/m3 for PM10 2 and 200 micrograms/m3 for SO2 3 as specified by the U. S. Environmental Protection Agency. Source: Frijters et al. 1.

Problem:
Life Satisfaction
Solution:
More Resources Into Mental Health

Income and Well-Being

Of great interest, in considering national economic policy, is the link between national income or GDP and overall well-being. The Easterlin Paradox 4 holds that, beyond a certain level of economic development, additional national income does not improve national happiness. Since then, several studies have examined the relationship further, with the weight of evidence that even wealthier countries see happiness gains from additional economic growth. Following is a summary of select studies.

Income and Well-Being Correlation
StudyConclusion
Easterlin, 2017Short term correlation between happiness and GDP but no long-term correlation
Layard, 2003National happiness grows with income but saturates at around $23,000 per capita (2020 dollars).
Yu & Chen, 2016Positive emotions associated with relative income position, negative emotions with absolute position
Kahneman & Deaton, 2010Life satisfaction rises with income indefinitely, emotional well-being caps at around $90,000/year (2020 dollars).
Stevenson & Wolfers, 2008GDP and happiness are correlated at all income levels, within countries, between countries, and over time
Diener et al., 2013Rising incomes lead to improved subjective well-being, even in wealthier countries, and benefits are persistent.
Veenhoven & Vergunst, 2014At all income levels, a 1% increase in GDP/cap/year is followed by a 0.0034 points rise in happiness.
Diener et al., 1993Income produces happiness at all levels in the United States, no evidence the effect is relative.

Select studies that examine the relationship between national GDP or income and happiness. Studies cited: 5, 6, 7, 8, 9, 10, 11, 12.

Studies generally find a linear relationship between well-being and the log of income (e.g. 10 and 11). This means that, at higher levels of wealth, a greater increase of income is needed to produce the same increase of well-being.

Measures of Well-Being

Several alternatives to gross domestic product (GDP) have been proposed as measures of national well-being.

MetricIncludesSource
Genuine Progress IndicatorEconomic measures include personal income, housework and parenting, volunteer work, higher education, value of infrastructure, net capital, and financial flows. Several social and environmental metrics, measured solely as costs.UN 13
OECD's Better Life IndexMaterial well-being (income, jobs, housing), quality of life metrics, sustainability (natural, human, economic, social capital).UN 13
Human Development IndexLife expectancy, schooling, incomeUNDP 14
Bhutan's Gross National HappinessNine domains, revolving around sustainable and equitable development, environmental conservation, preservation and promotion of culture, and good governanceUra et al. 15
Sweden's Wellbeing IndexGDP per capita, (un)employment, household and government debt, air and water quality, land protection, chemical pollution, greenhouse gases, poverty, health, education, trust, life satisfaction.Government of Sweden 16

Many sources assert that economists and politicians pursue "economic growth at all costs", and while this is an exaggeration 17 (policies that pursue other social goals at the expense of GDP are prevalent around the world), other metrics of social well-being are welcome. Decisions on how to weigh factors, and which factors to include, in any metric that purports to be a universal measure of well-being are necessarily political decisions.

Building on the work of Easterlin 7 (see also Layard 9), many researchers assert that happiness and human well-being saturate at a wealth point which much of the world has now surpassed. Several other researchers (for example, see 5, 6, 8, 10, 11) have come to the conclusion that well-being continues to increase at income levels at least as high as the highest in the world today.

Close Relationships

The prevalence of close relationships is an important aspect of well-being. The number of close friendships for Americans shows signs of substantial decrease.

The image: "close_friends.svg" cannot be found!

Source: Survey Center on American Life 18.

References

  1. Frijters, P., Clark, A., Krekel, C., Layard, R. "A Happy Choice: Wellbeing as the Goal of Government". CEP Discussion Papers dp1658, Centre for Economic Performance, LSE. October 2019. ↩ ↩2

  2. U. S. Environmental Protection Agency. "The National Ambient Air Quality Standards for Particle Pollution". Revised December 2012. ↩

  3. U. S. Environmental Protection Agency. "Primary National Ambient Air Quality Standard (NAAQS) for Sulfur Dioxide". Revised February 2019. ↩

  4. Easterlin, R. "Does Economic Growth Improve the Human Lot? Some Empirical Evidence". Nations and Households in Economic Growth, Essays in Honor of Moses Abramovitz, pp. 89-125. 1974. ↩

  5. Diener, E., Sandvik, E., Seidlitz, L., Diener, M. "The relationship between income and subjective well-being: Relative or absolute?". Social Indicators Research 28, pp. 195-223. March 1993. ↩ ↩2

  6. Diener, E., Tay, L., Oishi, S. "Rising income and the subjective well-being of nations". Journal of Personality and Social Psychology 104(2), pp. 267-276. 2013. ↩ ↩2

  7. Easterlin, R. "Paradox Lost?". Review of Behavioral Economics 4(4), pp. 311-339. December 2017. ↩ ↩2

  8. Kahneman, D., Deaton, A. "High income improves evaluation of life but not emotional well-being". Proceedings of the National Academy of Sciences of the United States of America 107(38), pp. 16489-16493. September 2010. ↩ ↩2

  9. Layard, R. "Has social science a clue?: what is happiness? Are we getting happier?". In: Lionel Robbins memorial lecture series , 03-05 Mar 2003, London, UK. March 2003. ↩ ↩2

  10. Stevenson, B., Wolfers, J. Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox. Brookings Papers on Economic Activity, Vol. 2008. Spring 2008. ↩ ↩2 ↩3

  11. Veenhoven, R., Vergunst, F. "The Easterlin illusion: economic growth does go with greater happiness". International Journal of Happiness and Development 1(4). 2014. ↩ ↩2 ↩3

  12. Yu, Z., Chen, L. "Income and Well-Being: Relative Income and Absolute Income Weaken Negative Emotion, but Only Relative Income Improves Positive Emotion". Frontiers in Psychology 7:2012. 2016. ↩

  13. Department of Economic and Social Affairs, Sustainable Development. "Chapter 5: Measuring Progress". United Nations. Accessed January 18, 2021. ↩ ↩2

  14. United Nations Development Program. "Human Development Index (HDI)". United Nations. Accessed January 18, 2021. ↩

  15. Ura, K., Alkire, S., Zangmo, T., Wangdi, K. An Extensive Analysis of GNH Index. Center for Bhutan Studies. 2012. ↩

  16. Ministry of Finance. "New measures of wellbeing". Government Offices of Sweden. August 2017. ↩

  17. Snowdon, C. Selfishness, Greed and Capitalism: Debunking Myths about the Free Market. Institute of Economic Affairs Monographs, Hobart Paper 177, ISBN: 978-0-255-36679-3. 2015. ↩

  18. Cox, D. A. "The State of American Friendship: Change, Challenges, and Loss". Survey Center on American Life, American Enterprise Institute. June 2021. ↩