Happiness, income and poverty

Andrew E. Clark (1, 2)

1 PSE - Paris School of Economics
2 PJSE - Paris Jourdan Sciences Economiques

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.

Mots clés: Happiness; Income; Inequality; Poverty

Domaines: Economies et finances

Andrew E. Clark. Happiness, income and poverty. International Review of Economics Education, 2017, 64 (2), pp.145-158. ⟨10.1007/s12232-017-0274-7⟩. ⟨halshs-01630349⟩