Is it wrong to assume economic growth promotes well-being in society?

Abstract

Economic growth has for long been implicitly assumed to promote well-being in society, but lately scholars in the field of happiness research have raised critique towards this assumption. This paper investigate the relationship between economic growth and subjective well-being (SWB) in society, a topic that have risen in popularity over recent decades. This is done by conducting a fixed effect regression analysis on a panel data set created from the European Social Survey (ESS) data on happiness and life satisfaction in 36 European countries between 2002 and 2016 as well as indicators from the OECD. We find SWB to be positively correlated with per capita GDP level but not with its relative change, an effect that is strengthened when controlling for change in the income distribution. Furthermore, we do not find support of income inequality being a moderator of the relationship between economic growth and SWB.