The Division of Politics and Economics invites the CGU community to attend this week’s Tuesday Lunch Talk featuring Arie Kapteyn, Professor of USC. Lunch will be provided.
Arie Kapteyn PhD, is a Professor of Economics and the Executive Director of the Dornsife College of Letters Arts and Sciences Center for Economic and Social Research (CESR) at the University of Southern California. Before founding CESR at USC in 2013, Prof. Kapteyn was a Senior Economist and Director of the Labor & Population division of the RAND Corporation. He came to RAND after an almost twenty years stint at Tilburg University in the Netherlands, where he was professor of economics, dean, and founding director of several institutes.
Talk title: U.S. Life Satisfaction Within and Across Countries: The Role of Societal Capital and Relative Income
A longstanding debate in economics concerns the relationship between life satisfaction and income. In cross-sections, life satisfaction and income are consistently positively related. However, Easterlin (1974) proposed the so-called Easterlin Paradox, in which cross-sectionally income and happiness are positively related, but over time, happiness is stable despite income increases. Since then, with the availability of data on many more countries, several authors have found strongly positive relations between average life satisfaction and GDP per capita. In this paper we use new data from the Gallup World Poll to further investigate determinants of life satisfaction within and across countries and in particular the effects of income. We find that within countries life satisfaction is strongly related to one’s income relative to the median in the country, with no role for ppp-adjusted absolute income; variation across countries can be explained entirely by societal development goods, such as life expectancy and expenditures on health care. Thus it appears that the strong positive relation between GDP per capita and average subjective well-being found in recent papers does not point to the role of income per se, but rather to the quality of societal goods that a higher GDP can buy.
More information about the DPE Tuesday Talk Series can be found here.