Life Satisfaction and Income

There's a persistant meme that greater income has no impact on happiness. I see this brought up most frequently in conversations about international development – should we really view economic development in China or India as a positive thing?  Will it really lead to greater happiness there?  The data says, without a doubt:  Yes.

Betsey Stevenson and Justin Wolfers, surveying happiness data in dozens of countries over the past decade, have found a clear correlation between the log of income and how satisfied with life people say they are, that holds true inside nations and between nations.

You can read more at this piece at The Economist or read their full NBER Working Paper.

To be clear, other factors – health, social connections, marital or relationship status, genetics – play large roles and often quite larger than income. And many wealthy people are miserable. How you use money, and the other circumstances of ones life matter.  But income is a significant factor. Particularly at the low end, where a very small absolute change is a large percentage change in income, that's reason to hope for economic growth.