Economic growth and subjective well-being: analyzing the formative mechanism of Easterlin Paradox

In this paper, we investigate the formative mechanism of the Easterlin paradox in China using 2010 Chinese General Social Survey (CGSS) data. By establishing a multi-factor, multi-level dynamic framework, we unveil the formative mechanism of the Easterlin paradox. The impact of multiple factors on subjective well-being and the influence of micro-level individual factors conditional on macro-economic development were analyzed. We find that with economic growth, on the one hand, material needs upgraded to enjoyment needs, and the return to well-being from material conditions decreased. On the other hand, the intensity of social inequality triggered relative deprivation, offsetting the return from economic growth. Therefore, subjective well-being stagnated, instead of increasing with economic growth.