percent (DeNavas-Walt, Proctor, and Lee, 2006). In turn, the top two quintiles of the household income distribution
experienced mild growth in happiness, while happiness actually declined for the bottom three quintiles.
The family income data recorded in the GSS suggest roughly similar real income growth: an average increase of
about 32 percent over the full sample, which was quite unequally distributed, with real declines reported in the bottom
quintile. Although the CPS data reported above are surely a more reliable indicator of national trends in the income
distribution, the family income data collected in the GSS may speak to the characteristics of the particular sample for
whom we have happiness data.
Given these unbalanced gains, it is worth asking how the income-happiness link at the micro level aggregates to
yield the macroeconomic income-happiness link. In the simple case in which income gains accrue proportionally across
the distribution, individual happiness-log income functions aggregate to a macro-level linear relationship between average
log income and happiness aggregates. However, the sharp rise in inequality over recent decades drives a large wedge
between the rise in the log of average income (which is what we typically observe in macro data) and the average of log
income (which is the relevant aggregate for predicting average happiness).
We computed the rise in income inequality in both the CPS and the GSS samples. From 1972 through 2006, the
CPS measure of the log of average real household income rose by 41 log points, while inequality—as measured by the
mean log deviation—rose by 19 log points.38 Together these numbers imply that the average of log household income rose
by only 22 log points over the full sample. For the GSS, the rise in the log of average family income is slightly smaller, at
32 log points, and the measured rise in inequality (again measured as the mean log deviation) is 15 log points.
Thus, within the GSS sample, the average of the log of family income has risen by only around 17 log points
since 1972 (equivalent to an annual rate of growth of only around 0.5 percent a year).39 Based on a happiness-income
gradient of around 0.4, it seems reasonable to expect that happiness in the United States would have been basically flat
over the past thirty-five years (or more precisely, to have risen by only 0.4×0.17=0.07 points). Thus, by refocusing our
attention on the appropriate macroeconomic aggregate (in the bottom panel of Figure 20), it can be seen that the U.S.
experience could be roughly consistent with the accumulated evidence of a robust happiness-income link.
Moreover, many other societal trends beyond trends in GDP per capita may influence trends in happiness. As
such, no single national case study can be dispositive in our effort to understand how national well-being changes with
38 It is worth being a bit more explicit about how reasonably robust economic growth translates into weaker growth in the average log
income. From 1972 through 2006, real GDP per capita grew by 93 percent, or 66 log points, and disposable personal income per
capita rose by a similar amount. Beyond these aggregate data from the Bureau of Economic Analysis (BEA), the Census Bureau also
calculates income per household from the March CPS. These alternative data suggest that income per capita (in 2005 dollars) rose by
66 percent, or by 51 log points. Much of the gap between the BEA and the CPS measures reflects differences in deflators. From 1972
through 2006 the CPI-U-RS (the version of the consumer price index used by the Census Bureau to deflate the CPS data) rose 11 log
points more than the GDP deflator. This difference would be even larger (22 log points) if we deflated instead by the official CPI-U
series. On a per household basis, the rise in the log of average income was even less impressive, at only 41 log points.
39 We deflate the GSS income data using the CPI-U-RS rather than the CPI-U-X. If instead we used the official deflator, the average
log of family income would have registered barely any growth at all.
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