Happiness, income and poverty

Journal article: There is considerable evidence from a variety of sources to suggest that well-being is a function of relative income. These findings have been used to explain the Easterlin Paradox, whereby a rise in income for all does not lead to a rise in average happiness in a country (even though the cross section relationship between income and happiness is positive). This relativity of utility has led to calls for policy to focus away from GDP. I here first discuss some of the evidence that well-being is indeed relative in income, but then consider two relatively little-analysed issues to suggest that there may continue to be a role for GDP per capita in happiness-based policy: the inequality of subjective well-being, and the specific case of those in income poverty.

Author(s)

Andrew E. Clark

Journal
  • International Review of Economics Education
Date of publication
  • 2017
Keywords JEL
D31 I31
Keywords
  • Happiness
  • Income
  • Inequality
  • Poverty
Pages
  • 145-158
Version
  • 1
Volume
  • 64