Although the results from each of these approaches suggest that cross-sectional comparisons of people within a
population have some validity, there is less evidence about the validity of comparisons across populations, which can be
confounded by translation problems and cultural differences. Many researchers have argued for the possibility of a
biologically based set of emotions that are universal to humans and appear in all cultures (Diener and Tov, 2008).
Research has found that people across cultures clearly recognize emotions such as anger, sadness, and joy when displayed
in others’ facial expressions (Ekman and Friesen,1971; Ekman , et al., 1987). Studies have also found that when people
around the globe are asked about what is required for more happiness or life satisfaction, the answers are strikingly
uniform: money, health, and family are said to be the necessary components of a good life (Easterlin, 1974). Diener and
Tov (2008) argue that it is this possibility of biologically based universal emotions that suggests that well-being can be
compared across societies.
A similar argument applies to making comparisons of subjective well-being within countries over time. One
difficulty with time-series assessments is the possibility that small changes in how people perceive or answer questions
about their happiness may be correlated with changes in the outcomes—such as income—whose relationship with
subjective well-being one wishes to assess. The evidence regarding aggregate changes in happiness over time is
inconsistent. Aggregate happiness has been shown to fall when unemployment and inflation rise, and to move in the
expected direction with the business cycle (Di Tella, MacCulloch, and Oswald, 2003; Wolfers, 2003). However, on
average, women in both the United States and Europe report declining happiness relative to men over recent decades, a
finding that is difficult to reconcile with changes in objective conditions (Stevenson and Wolfers, 2007). Finally, this
current paper is motivated by a desire to better understand the failure of past studies to isolate a link between happiness
and economic growth.
A largely under-acknowledged problem in making intertemporal comparisons is simply the difficulty in
compiling sufficiently comparable data. For instance, Smith (1986) shows that small changes in the ordering of questions
on the U.S. General Social Survey led to large changes in reported happiness. These same data seem to show important
day of week and seasonal cycles as well. Another difficulty with intertemporal comparisons is that attempts to cobble
together long time series (such as for Japan, the United States, or China) often involve important coding breaks. Many of
these issues simply add measurement error, making statistically significant findings more difficult to obtain. However,
when scarce data are used to make strong inferences about changes in well-being over decades, even small amounts of
measurement error can lead to misleading inferences.
To date, much of the economics literature assessing subjective well-being has tended to use measures of “life
satisfaction” and “happiness” interchangeably. The argument for doing so is that these alternative measures of well-being
are highly correlated and have similar covariates. However, they capture somewhat different concepts, with happiness
more related to affect whereas satisfaction is more evaluative. The psychology literature has tended to treat questions
probing affect as distinct from more evaluative assessments. We will consider both the income-happiness and income-
satisfaction links in parallel. A subtle measurement issue is also involved, in that many of the surveys asking individuals