Should we pursue happiness? The role of income in determining Subjective Well-Being

Abstract

Over recent years, the interest in the study of subjective well-being (SWB) has increased more and more. One of the main discussions among academics and policy makers is whether SWB may be correlated with the level of both relative and absolute level of income. Subjective well-being measures are gaining popularity as a proxy of utility, even though its relationship with income is still unclear. In his seminal work, (Easterlin1974) basically pointed out that there is no relation between average income of a country and its level of happiness. Nevertheless, other influential works by (Sacks2013, Stevenson2008) argued that the correlation exists, it follows a linear-log relationship and moreover there is no evidence of a satiation point. The primary goal of this dissertation is to study more in depth the relationship between income and subjective well-being, in particular with life satisfaction and happiness, trying to challenge both `schools of thought'. Furthermore, in contrast with theories of `happy degrowth', I try to show the importance of economic growth and prosperity in determining happiness, and more in general human well-being.