Easterlin Paradox Revisited: do Increases in Income Bring Higher Levels of Income Satisfaction?

Mentus, Vladimir and Vladisavljević, Marko (2021) Easterlin Paradox Revisited: do Increases in Income Bring Higher Levels of Income Satisfaction? Sociologija : časopis za sociologiju, socijalnu psihologiju i socijalnu antropologiju. pp. 220-235. ISSN 0038-0318

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Abstract

In this paper, we examine the relationship between income and
income satisfaction in the pool of developed European economies, for the period
between 2002 and 2018. Although the nexus between income and most subjective
well-being indicators is frequently investigated in prior studies, the research
investigating the relationship between income and income satisfaction over time
is non-existing. We find that during the observed period real disposable household
income significantly increased, while the satisfaction with household income
remained constant. Furthermore, the analysis within hierarchical linear modeling
shows that while between-country variations in income affect income satisfaction,
this is not the case for income variations over time. Our findings support the notion
of the Easterlin paradox, which indicates that in the long-run increases in income
do not lead to higher levels of well-being. Explanations for such results may be
found in the social comparison theory, hedonic adaptation theory and aspiration
level theory: increasing income does not bring positive effects on income satisfaction
due to relevance of the relative and not the absolute income, adaptation to income
changes, or higher levels of aspirations resulting from income rise.

Item Type:	Article
Additional Information:	COBISS.ID=43826185
Uncontrolled Keywords:	income satisfaction, developed economies, Easterlin Paradox, HLM
Research Department:	Welfare Economics
Depositing User:	Jelena Banovic
Date Deposited:	30 Dec 2021 16:38
Last Modified:	30 Dec 2021 16:38
URI:	http://35.240.28.64/id/eprint/1695
Author Links:	[error in script] No links available.

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