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Easterlin paradox revisited: Do increases in income bring higher levels of income satisfaction?
[journal article]
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 i... view more
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.... view less
Keywords
income; satisfaction; Europe; household income
Classification
Social Psychology
Sociology of Economics
Income Policy, Property Policy, Wage Policy
Free Keywords
Income Satisfaction, Developed Economies, Easterlin Paradox, HLM; EU-SILC
Document language
English
Publication Year
2021
Page/Pages
p. 220-235
Journal
Sociologija : časopis za sociologiju, socijalnu psihologiju i socijalnu antropologiju, 63 (2021) 2
DOI
https://doi.org/10.2298/SOC2102220M
ISSN
2406-0712
Status
Published Version; peer reviewed