Will GDP Growth Increase Happiness in Developing Countries?

By Andrew E. Clark, Claudia Senik. Social Science Research Network, 2011

119 citations recorded by the source corpus.

This paper asks what low-income countries can expect from growth in terms of happiness. It interprets the set of available international evidence pertaining to the relationship between income growth and subjective well-being. Conforming to the Easterlin paradox, higher income always correlates with higher happiness, except in one case: whether national income growth yields higher well-being is still hotly debated; essentially, the question is whether the correlation coefficient is "too small to matter". The explanations for the small correlation between income growth and subjective well-being over time appeal to the nature of growth itself (e.g. negative side-effects such as pollution), and to the psychological importance of relative concerns and adaptation. The available evidence contains two important lessons: income comparisons do seem to affect subjective well-being even in very poor countries; however, adaptation may be more of a rich country phenomenon. Our stand is that the idea that growth will increase happiness in low-income countries cannot be rejected on the basis of the available evidence. First, cross-country time-series analyses are based on aggregate measures, which are less reliable than individual ones. Second, development is a qualitative process that involves take-offs and thresholds. Such regime changes are eye-visible through the lens of subjective satisfaction measures. The case of Transition countries is particularly impressive in this respect: average life satisfaction scores closely mirror changes in GDP for about the first ten years of the transition process, until the regime becomes more stable. If subjective measures of well-being were made available in low-income countries, they would certainly help measuring and monitoring the different stages and dimensions of the development process.

Subfields: Social Psychology, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/00534718a95a8edf55cfd4b9ddc84665b8e9bb01

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Social Psychology

1. J. Bradshaw
2. Bruno Martorano
3. Saizi Xiao
4. M. Asadullah
5. Luisa Natali
6. C. Neubourg
7. E. Yeoh

In Sociology and Political Science

1. J. Bradshaw
2. Bruno Martorano
3. Saizi Xiao
4. M. Asadullah
5. Luisa Natali
6. C. Neubourg
7. E. Yeoh

Citations in the corpus

• Inequality with Ordinal Data (2017, unknown): “(16)See Clark and Senik (2011) for a recent survey. (17)See Easterlin (1995), Easterlin et al. (2010). (18)See Hagerty and Veenhoven (2003), Deaton (2008), Stevenson and Wolfers (2008a), Inglehart et al.”
• Children’s Subjective Well-Being in Rich Countries (2013, background): “One of the explanations is related to the existence of decreasing marginal utility: “concretely, this means that the effect of earning an additional ten thousand dollars on subjective well-being becomes progressively smaller as one’s initial level of income increases” (Clark and Senik, 2011: 14).”
• The Happiness Gap in Eastern Europe (2016, unknown): “that surveys of life satisfaction can generally yield meaningful and consistent measures of people’s welfare (Clark and Senik, 2011; Nikolova and Sanfey, 2014).”
• Subjective Well-Being in China, 2005-2010: The Role of Relative Income, Gender and Location (2015, background): “However, the level of happiness was much higher in 1990 because of state guaranteed jobs, low unemployment rate, and extensive social safety net provisions (Easterlin et al., 2012; Easterlin, 2013).”