Irish survey; dropping this observation yields a statistically significant coefficient on log GDP per capita of 0.14, with a
standard error of 0.05 for the entire sample period.) Our point is not to count up the number of statistically significant
responses one way or the other, but rather to suggest that across the nine large European countries for which we have a
long time series, life satisfaction has typically risen with GDP per capita. Moreover, estimates of the satisfaction-GDP
gradient based on these national time series, although quite variable, average around 0.25, with some estimates larger and
some smaller.
The upward trend in life satisfaction across the European Union is not widely understood, and in Figure 17, we
provide some intuition for why this has not been obvious. The simplest approach to building an E.U.-wide time series of
life satisfaction involves taking a population-weighted average of the satisfaction levels of whichever countries happen to
be member states at any point in time. Through this period the E.U. has systematically expanded to incorporate poorer
countries, which have lower average life satisfaction. This expansion has thus pushed downward measured average life
satisfaction, despite the fact that satisfaction rose within most countries. This can most easily be seen by simply
examining the nine countries (the EU-9) which have been in the E.U., and hence the Eurobarometer, since 1973. This
analysis, shown with short-dashes, takes a population-weighted average of the satisfaction indices of the EU-9 countries
and shows rising life satisfaction through time.
In order to use the data from all countries without having the resulting time series driven by compositional
changes, we also construct a regression-adjusted series by running an OLS regression of national satisfaction indices on
time (survey round) fixed effects, weighting by population, and controlling for country fixed effects (thereby adjusting for
different average well-being levels among new entrants to the E.U.). These time fixed effects are also plotted in Figure 17
and clearly suggest a rising trend in life satisfaction similar to that seen in the EU-9 average. Finally, we create a spliced
series by summing through time first differences in the broadest available fixed-weight average of satisfaction in E.U.
member nations.30 This series is quite similar to the regression-adjusted measure. Clearly the simple average disguises
much of the rise in satisfaction occurring within E.U. member nations.
Even accounting for these compositional changes it would be difficult to infer that a positive trend either did or
did not exist on the basis of only Easterlin’s 1973-89 sample. But over the entire 1973-2007 period, the magnitude of the
trend rise in satisfaction turns out to be quite close to what might be expected given underlying GDP trends. Fitting a
simple time trend to the composition-adjusted aggregates shown in Figure 17 suggests that life satisfaction in Europe rose
at a (statistically significant) average rate of about 0.006 per year, compared with a trend rise in log GDP per capita of
around 0.020 per year. Considered jointly, these trends point to a long-run satisfaction-GDP gradient of about 0.3
30 The spliced series analyzes the EU-9 (from the beginning of the survey in summer 1973), expanding to the EU-10 (adding Greece,
from 1981 onward), then the EU-12 (adding Portugal and Spain from 1986 onward), the EU-12+ (German reunification, adding East
German surveys from the Fall 1990 survey onward), the EU-16 (adding Austria, Finland and Sweden from 1995 onward), the EU-26
(adding Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia from the Fall 2004
survey onward), and the EU-27 (adding Bulgaria and Romania from 2007). Population weights for each index reflect the average
population share of each country in that aggregate.
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