Chapter

Happiness Adaptation to Income Beyond “Basic Needs”

Rafael Di Tella and Robert MacCulloch

in International Differences in Well-Being

Published in print February 2010 | ISBN: 9780199732739
Published online May 2010 | e-ISBN: 9780199776887 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199732739.003.0008
Happiness Adaptation to Income Beyond “Basic Needs”

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This chapter tests for whether, once “basic needs” are satisfied, there is happiness adaptation to further gains in income using three data sets. Individual German Panel Data from 1985-2000, and data on the well-being of over 600,000 people in a panel of European countries from 1975-2002, shows different patterns of adaptation to income across the rich and poor. This chapter finds evidence that for wealthy Germans, and for the rich half of European nations, higher levels of per capita income don’t buy greater happiness. The reason appears to be adaptation. However even for the rich half of European nations such habituation may take over 5 years so the happiness gains that they experience, whilst not permanent, can still be relatively long-lasting. Finally the chapter studies a cross section of nations in 2005 from the World Gallup Poll and find that the past 45 years of economic growth (from 1960-2005) in the rich half of nations has not brought happiness gains above those that were already in place once the 1960s standard of living had been achieved. However in the poorest half of nations the null hypothesis cannot be rejected that the happiness gains they have experienced from the past 45 years of growth have been the same as the gains that they experienced from growth prior to the 1960s.

Keywords: happiness; income; basic needs; adaptation; international

Chapter.  11460 words.  Illustrated.

Subjects: Social Psychology

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