Relative Income, Subjective Wellbeing and the Easterlin Paradox: Intra- and Inter-national Comparisons

  • Arthur GrimesEmail author
  • Marc Reinhardt


We extend the Easterlin Paradox (EP) literature in two key respects. First, we test whether income comparisons matter for subjective wellbeing both when own incomes are compared with others within the country (intra-national) and with incomes across countries (inter-national). Second, we test whether these effects differ by settlement-type (rural through to large cities) and by country-type (developed and transitional). We confirm the intra-national EP prediction that subjective wellbeing is unchanged by an equi-proportionate rise in intra-country incomes across all developed country settlement-types. This is also the case for rural areas in transitional countries but not for larger settlements in those countries. Inter-national income comparisons are important for people’s subjective wellbeing across all country-settlement-types. Policy-makers must therefore consider their citizens’ incomes in an international context and cannot restrict attention solely to the intra-national income distribution.


Easterlin paradox Subjective wellbeing International income comparisons Rural-urban wellbeing 



We thank Robert MacCulloch, Tim Hazledine, Philip Morrison, John Helliwell, Motu colleagues and participants at the Regional Studies Association conference (Piacenza) and the New Zealand Association of Economists conference (Wellington) for comments on earlier drafts. We are grateful for funding from the Marsden Fund of the Royal Society of New Zealand (MEP1201) and from the Resilient Urban Futures programme (Ministry of Business, Innovation and Employment). The authors are solely responsible for the views expressed.


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Authors and Affiliations

  1. 1.School of GovernmentVictoria University of WellingtonWellingtonNew Zealand
  2. 2.Motu ResearchWellingtonNew Zealand
  3. 3.University of BolognaBolognaItaly

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