The Robustness of the Easterlin Paradox

Easterlin’s seminal paper in 1974 claimed that due to the two relationships between GDP per capita and self-reported well-being at individual and country levels, happiness was in fact stimulated by relative income. However, more recent papers have contradicted this hypothesis, claiming that his study was flawed and showing evidence of a positive correlation between happiness and absolute income. This paper aims to forward this line of thought, claiming that one of Easterlin’s crucial flaws was the absence of robustness from his study, in particular, his assertion that there is a lack of correlation between happiness and GDP per capita on a country-level. We shall be reassessing this relationship, recreating his study, analysing more economic performance indicators, introducing further controls, and using a more recent dataset that includes more countries.