Abstract:The present article builds upon the results of an empirical study exploring key factors which determine life satisfaction in Barcelona. We look at the way income reductions, associated with the current economic situation in Spain, affect subjective well-being. We find no evidence for a decrease of happiness associated with income declines that have occurred one or two years ago. Recent reductions in income even exhibit a positive relation with subjective well-being. Having lower incomes in the long-run is, however, associated with lower happiness in a few model specifications tested here. The ambiguous relation between income reduction and subjective well-being found here suggests that income and consumption degrowth may not necessarily reduce overall happiness. This is especially the case if it corrects for habituation and rivalry, and at the same time is able to spur compensatory life-style changes that lower working efforts and reference consumption standards.
This media entry was a contribution to the special session "Well being, social capital and income change" at the 4th International Degrowth Conference in Leipzig in 2014.