Income, Health and Well-Being around

Journal of Economic Perspectives—Volume 22, Number 2—Spring 2008 —Pages 53–72

Income, Health, and Well-Being around the World: Evidence from the Gallup
World Poll
Angus Deaton

T

he great promise of surveys in which people report their own level of life satisfaction is that such surveys might provide a straightforward and easily collected measure of individual or national well-being that aggregates over the various components of well-being, such as economic status, health, family circumstances, and even human and political rights. Layard (2005) argues forcefully such measures do indeed achieve this end, providing measures of individual and aggregate happiness that should be the only gauges used to evaluate policy and progress. Such a position is in sharp contrast to the more widely accepted view, associated with Sen (1999), which is that human well-being depends on a range of functions and capabilities that enable people to lead a good life, each of which needs to be directly and objectively measured and which cannot, in general, be aggregated into a single summary measure.
Which of life’s circumstances are important for life satisfaction, and which—if any— have permanent as opposed to merely transitory effects, has been the subject of lively debate. For economists, who usually assume that higher incomes represent a gain to the satisfaction of individuals, the role of income is of particular interest.
It is often argued that income is both relatively unimportant and relatively transitory compared with family circumstances, unemployment, or health (for example,
Easterlin, 2003). Comparing results from a given country over time, Easterlin
(1974, 1995) famously noted that average national happiness does not increase over long spans of time, in spite of large increases in per capita income. These

y Angus Deaton is Dwight D. Eisenhower Professor of International Affairs and Professor of
Economics and International Affairs, both at the

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