domenica 5 marzo 2017

Subjective Well‐Being and Income: Is There Any Evidence of Satiation? Wolfers, Justin Stevenson, Betsey

Subjective Well‐Being and Income: Is There Any Evidence of Satiation?
Wolfers, Justin Stevenson, Betsey
Citation (APA): Wolfers, J. S. (2014). Subjective Well‐Being and Income: Is There Any Evidence of Satiation? [Kindle Android version]. Retrieved from

Parte introduttiva
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once “basic needs” have been met, higher income is no longer associated with higher in subjective well-being.
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we find no support for this claim.
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In 1974 Richard Easterlin
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increasing average income did not raise average well-being,
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Easterlin Paradox.
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new and more comprehensive data
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robust positive relationship between well-being and income across countries and over time (Deaton, 2008; Stevenson and Wolfers, 2008; Sacks, Stevenson, and Wolfers, 2013).
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researchers have argued for a modified version of Easterlin’s hypothesis,
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claiming that beyond a certain income threshold, further income is unrelated to well-being.
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Diener and Seligman (2004, p.5) state that “there are only small increases in well-being” above some threshold.
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Clark, Frijters and Shields (2008, p.123) state more starkly that “greater economic prosperity at some point ceases to buy more happiness,” a similar claim is made by Di Tella and MacCulloch (2008, p.17): “once basic needs have been satisfied, there is full adaptation to further economic growth.”
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Layard (2003, p.17) argues that “once a country has over $15,000 per head, its level of happiness appears to be independent of its income;” while in subsequent work he argued for a $20,000 threshold (Layard, 2005 p.32-33). Frey and Stutzer (2002, p.416) claim that “income provides happiness at low levels of development but once a threshold (around $10,000) is reached, the average income level in a country has little effect on average subjective well-being.”
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graphs show clearly that increasing income yields diminishing marginal gains
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this relationship need not reach a point of nirvana beyond which further gains in well-being are absent.
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there is no satiation point.
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we find no evidence of a satiation point.
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I. Cross-Country Comparisons
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evaluating whether countries at different levels of economic development have different average levels of subjective well-being.
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log of real GDP per capita,
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purchasing power parity.4
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two measures of life satisfaction drawn from the Gallup World Poll:
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“ladder of life”
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question about overall life
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data are drawn from the five waves of the Gallup World Poll run between 2008 and 2012 and GDP per capita, plotted on a log scale. We have data on 155 countries, which account for over 95% of the world’s population, across the spectrum of levels of economic development. Each of these measures of subjective well-being is highly correlation with GDP per capita ( 0.79 for the 155 countries in the upper panel, and 0.85 for the 86 countries in the lower panel) .
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Pew Global Attitudes studies, which posed the satisfaction ladder question in 44 countries in 2002, 47 countries in 2007, and 22 countries in 2010,
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Social Survey Program, which asked a consistent happiness question in 1991, 1998, 2001, 2007 and 2008
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Each of these datasets strongly reject the null that 0.
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In Table 2 we consider alternative thresholds for “poor” and “rich”.
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the well-being–income relationship observed among poor countries holds in at least equal measure among rich countries.
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Our larger datasets emphatically reject the weak and strong forms of the modified-Easterlin hypothesis,
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II. Within-Country Cross-Sectional Comparisons
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comparing rich and poor people within a country.
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We begin by analyzing data from the United States,
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we find no evidence of a significant break in either the happiness-income relationship, nor in the life satisfactionincome relationship,
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This finding contrasts with a claim made by Frey and Stutzer (2002, p.409)
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III. Conclusions
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While the idea that there is some critical level of income beyond which income no longer impacts well-being is intuitively appealing, it is at odds with the data.
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there is no major well-being dataset that supports this commonly made claim.
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evaluative measures of life satisfaction and happiness
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Kahneman and Deaton (2010) have shown that in the United States, people earning above $75,000 do not appear to enjoy either more positive affect nor less negative affect
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they are based on very different measures of well-being,
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Indeed, those authors also find no satiation point for evaluative measures of well-being.
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Stevenson and Wolfers' Flawed Happiness Research eric falkenstein
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Richard Easterlin found that within a given country people with higher incomes were more likely to report being happy. However, between developed countries, the average reported level of happiness did not vary much with national income per person.
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although income per person rose steadily in the United States between 1946 and 1970, average reported happiness showed no long-term trend and declined between 1960 and 1970.
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the relative-status utility function is the key
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evolution favors a relative utility function
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Economists from Adam Smith, Karl Marx, Thorstein Veblen, and even Keynes focused on status, the societal relative
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they find that the income-happiness effect is at least twice as strong among richer
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further using one set of data the effect of income on happiness is negative.
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authors note, however, that this is merely because of one country, the Phillipines.
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Their second set of findings concern cross-sectional data within a country. Easterlin did not dispute this, however.
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Given positional goods like mates and lakefront property, relative wealth should matter.
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the biggest problem with the Sacks, Stevenson and Wolfers analysis is that they estimate a short-term relationship between life satisfaction and GDP, rather than the long-term relationship.
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over an economic cycle,
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people who aren't fighting for basic necessities are focused primarily on status
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Crude Materialism versus the Wolfers Equation Bryan Caplan
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Happiness (in Standard Deviations) = a + .35 * ln(income)
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Most people interpret Wolfers' findings as a shocking refutation of everyone who thinks that money has little effect
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I think not. If you picture a continuum with Epicureanism at 0, and crude materialism at 1, Wolfers stands at .24.
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effect of income on happiness, though positive, is small.
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if you currently earn $50,000, Wolfers' coefficient implies you'd need an extra $820,585 per year to durably increase your happiness by one lousy standard deviation. In math, that's not "zero effect of income on happiness." But in English, it basically is.
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Wolfers deliberately refrains from controlling for confounding variables,
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true effect of income on happiness is almost certainly even smaller
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it goes against first-hand experience, the wisdom of the ages, and the rightly interpreted empirical evidence.
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Wolfers Responds on Happiness
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I actually think 0.35 is pretty big.
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if there exist massive disparatives in income, then a small coefficient can have a big effect.
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The Happiness of the Richest Bryan Caplan
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100% of the richest people were "very happy."
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respondents with family income over half a million a year
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And in the same survey, happiness was virtually flat from $30k to $150k
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Extreme Epiricureanism is both demonstrably false and approximately true.
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the small effect of income/wealth on happiness throughout the income distribution remains ideologically inconvenient for free-market economists. A free-market economy is a fantastic tool for making people rich, but making people rich is a mediocre tool for making people happy.
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