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The Subjective Well-Being (SWB) scores encompasses important aspects of life beyond income, like whether a nation’s residents are free to engage in social activities without any interference or social discrimination, gender discrimination, health, education, war etc. And this has given rise to the notion that we should downplay the significance of income. However, it is not appropriate if the implication is that money is worthless or does not improve one’s quality of life who resides in relatively wealthier nations. In this study, using GDP per capita on a logarithmic scale, it has been found that SWB scores improves even among the well-off countries with percentage increase in GDP per capita, though in case of low-income countries, the increase of SWB is much substantial.

This study is to investigate the role of GDP per capita on life evaluation as measured in a 0-10 ladder by Gallup Organization, on a multi-country set up.

Past researches on economic growth and happiness produced mixed findings.

In order to study the interaction of economic and non-economic forces that shape a country’s development, Johnathan Temple and Paul Johnson, in their work “Social Capability and Economic Growth”, found a substantial 0.6 correlation between long-run growth and social development, using a data set of 74 developing countries between 1957 and 1962. According to this study, a higher level of social development can indicate when a country will attain a higher steady state income level.

 “Happiness and Growth the World Over-Time Series Evidence on the Happiness-Income Paradox” by Richard Easterlin and Laura Angelescu, using a data set of developed, developing and transition countries, holds that life satisfaction rises at a decreasing rate with the absolute level of GDP per capita, when well-off and poor countries are compared at the same point in time.

In the paper “When Economic Growth Doesn’t Make Countries Happier” by Selin Kesebir and Shigehiro Oishi, tried to inquire whether or not income inequality can explain the discrepancies in perspectives on whether or not economic progress makes people happier. Using happiness and GDP per capita data of 34 countries, both developed and developing countries, a correlation between income disparity and lower happiness was found, after adjusting for GDP.

Finally, in “The Great Escape: Health, Wealth, and the Origins of Inequality”, Angus Deaton holds that focusing on GDP per capita is not misleading, because even among the richest nations in the world, life evaluation increases with the increment in GDP per capita.

Data of this study consists of the survey measure of Subjective Well-Being (SWB) from February 18, 2022 release by the Gallup World Poll (GWP) covering years from 2005 to 2021, known as ladder. It is the national average response to the questions of life evaluation. [6] And GDP per capita based on purchasing power parity which in effect converted GDP per capita to constant international dollar of 2017 using the PPP rates.[7] The Model Equation SWBi= B0+B1 GDPi+Ei In another figure GDP per capita has been converted on a logarithmic scale to investigate how equal percentage change in income affect Subjective Well-Being.

A global map represented by 28 countries look much the same as an income map of the world: the citizens of Scandinavian countries, United States, United Kingdom, Germany, Japan, New Zealand, Kuwait, Singapore is rich and well-satisfied with SWB scores in the 6.0-7.9 range. The inhabitants of sub-Saharan Africa scores in the range 2.0-4.5, which shows unsatisfied places in the globe. One of the lowest scorers is Afghanistan, though not in terms of income, point towards a different perspective of low well-being.

Figure 1 depicts the Subjective Well-Being (SWB) of these 28 countries against Gross Domestic Product (GDP) per capita. Income is measured in purchasing power parity (PPP) international dollar at 2017 prices.

In the figure, the circles have areas proportional to those countries’ population. The two big countries in the left are India and China. The bottom left of the figure, where poor countries are, they are not only poor in income but at the same time evaluates their life poorly. On the other hand, the Scandinavian countries, the United States, Singapore, New Zealand and Kuwait, peoples have high income and life evaluation is also high. Countries of Latin America outperform the Russian Federation and former communist countries. Interestingly, Bangladesh outperforms India with a 20% less income per person.

Evaluation of life increases rapidly among poorer countries with the rise in income per person, whereas life evaluation increases less steeply with the increase in per person income for the really rich countries.[8] It is very tempting to conclude that money does nothing to improve the well-being after GDP per capita reaches $10,000 a year and many researchers have made this claim.[ 9,10] But Nobel Laureate Professor Angus Deaton refuted this claim.[11]

In order to show why money matters even among the rich countries, Figure 1 needs to redraw in somewhat different way. Here, we have to think about money in percentage increase, not in dollar terms. A scale with such property is known as a logarithmic (or log) scale.

Although the only change is in the labeling of the horizontal axis. Figure 2 looks completely different from Figure 1. The flattening among the rich countries has vanished, and the countries now lie more or less along a straight line. Thus, Figure 2 depicts that equal percentage differences in income produce equal absolute shifts in well-being.  But there are lots of exceptions with countries higher and lower in life evaluation than we might expect them to be, given their GDP per capita: India and China are two vibrant examples.[12]

Subjective Well-Being (SWB) scores captures important aspects of life beyond income and this has led to arguments that we should downplay the importance of income. If the implication is to consider other aspects of well-being, like health or education or ability to participate in society, its fine. But if the implication is that money is not worth anything and that income adds nothing for the inhabitants of richer countries, it is not fine.13 Life evaluation measures are far from perfect.

1. Diener, E., & Biswas-Diener, R. (2009). Will money increase subjective well-being?: A literature review and guide to needed research. Social Indicators Research Series, 119–154. https://doi.org/10.1007/978-90-481-2350-6_6 2. Headey, B., Muffels, R., & Wooden, M. (2007). Money does not buy happiness: Or does it? A reassessment based on the combined effects of wealth, income and consumption. Social Indicators Research, 87(1), 65–82. https://doi.org/10.1007/s11205-007-9146-y 3. Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493. https://doi.org/10.1073/pnas.1011492107 4. Diener, E. (1984). Subjective well-being. Psychological Bulletin, 95(3), 542–575. https://doi.org/10.1037/0033-2909.95.3.542 5. Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493. https://doi.org/10.1073/pnas.1011492107 6. Happiness, benevolence, and trust during COVID-19 and beyond. Happiness, Benevolence, and Trust During COVID-19 and Beyond | The World Happiness Report. (n.d.). Retrieved September 18, 2022, from https://worldhappiness.report/ed/2022/happiness-benevolence-and-trust-during-covid-19-and-beyond/ 7. GDP per capita, PPP (constant 2017 international $) - Aruba. Data. (n.d.). Retrieved September 18, 2022, from https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=AW 8. Deaton, A. (2015). In The Great Escape Health, wealth, and the origins of inequality. introduction, Princeton University Press. 9. Genes, culture, democracy, and happiness. (2003). Culture and Subjective Well-Being. https://doi.org/10.7551/mitpress/2242.003.0012 10. Cooper, R. N., & Layard, R. (2005). Happiness: Lessons from a new science. Foreign Affairs, 84(6), 139. https://doi.org/10.2307/20031793 11. Deaton, A. (2015). In The Great Escape Health, wealth, and the origins of inequality. introduction, Princeton University Press. 12. Deaton, A. (2008). Income, health, and well-being around the world: Evidence from the Gallup World Poll. Journal of Economic Perspectives, 22(2), 53–72. https://doi.org/10.1257/jep.22.2.53 13. Deaton, A. (2015). In The Great Escape Health, wealth, and the origins of inequality. introduction, Princeton University Press.