Does inflation affect well-being?

Abstract After years of low and stable inflation, high inflation rates have returned in many countries around the world. This paper highlights the importance of outliers for the study of whether inflation is associated with individual-level well-being using cross-country data. We combine Gallup World Poll individual-level data from 150 countries between 2007 and 2019 with inflation data obtained from the International Monetary Fund ( N = 1,946,459). We conduct a conceptual replication of the paper by El-Jahel et al. (J Money Credit Bank 55:2001, 2022). We replicate the main finding that inflation is significantly associated with well-being in the full sample ( p <0.001). However, dropping outlier observations equivalent to 0.26% of the full sample (or N = 5014) changes the outcome and results in a nonsignificant correlation between inflation and well-being ( p = 0.112). These observations come from three countries (South Sudan, Venezuela, and Zimbabwe). We argue that anomalous events (civil war and a failing state) drive the low-well-being and high-inflation combination experienced in these countries and that these observations, hence, are outliers. Our findings are robust to various approaches for identifying outliers, various well-being measures, and econometric details.