Determinants of Subjective Well-Being in High and Low Income Countries: do happiness equations differ across countries?

Different theories have been advanced to explain what really makes people happy or satisfied with their life, but they are mainly focused on developed countries. Furthermore, there is still not a general agreement on whether the determinants of subjective well-being are the same or not across countries. A deeper understanding of what is really important for individuals' well-being could provide positive spill-overs in drawing new economic policies liable to improve the human lot1. Present work tests the cross-country comparability of the happiness equation checking for the effects of absolute income, positional and relational goods and social capital in High and Low Income Countries. Results suggest an overall stability of the happiness equation in the two groups of countries. In particular, income is confirmed as an important correlate of subjective well-being, but at the same time it emerges as not being the only one. This holds for both poor and rich countries. Positional aspects considerably matters with stronger effects in poor countries. Proxies of relational goods are positively correlated with subjective well-being as well, although different aspects matter depending whether we are condidering poor or rich countries. Finally, social capital proxies show positive coefficients that are larger in high income countries.