The Wealth of Nations and the Happiness of Nations: Why “Accounting” Matters

We review income-happiness research in light of competing theoretical frameworks, unit of analysis, and methodological issues. Within-countries, absolute income is weakly related to happiness, comparison effects depend on the measure utilized, and income change and perceived income produce inconsistent findings. Across countries, absolute income is a stronger predictor of happiness, different comparison effects are significant, income change results are predominantly positive, and the financial-life satisfaction relationship is more robust.