Can economic growth reduce life satisfaction?

Last week Andrew Leigh linked to this paper by Angus Deaton which, using poll data from 132 countries, came up with findings contrary to previous subjective well-being research:

Average happiness is strongly related to per capita national income; each doubling of income is associated with a near one point increase in life satisfaction on a scale from 0 to 10. Unlike most previous findings, the effect holds across the range of international incomes; if anything, it is slightly stronger among rich countries. Conditional on national income, recent economic growth makes people unhappier… (emphasis added)

I’m not as convinced as Andrew that this is a good paper. The ‘life satisfaction’ question doesn’t actually directly ask whether people are satisfied with their lives, but instead asks them to imagine a ladder where the bottom represents the ‘worst possible life for you’ and the top the ‘best possible life for you’. The respondents are then asked where on the ladder they feel they stand at the present time. It would be quite possible to be dissatisfied with your life and to think that it won’t get any better, so low on a conventional life satisfaction rating but high on the imaginary ladder (personally, I’d put myself higher on the ladder than I would rate myself for life satisfaction). This could possibly explain why rich countries do well in the survey, since when things are already going well there is less scope for a better life.

And perhaps someone can explain the statistics to me, but I can’t see that Deaton has the data to show that ‘recent economic growth’ makes people unhappier. Continue reading “Can economic growth reduce life satisfaction?”