English: A snapshot of the correlation between income and happiness—between and within countries

Do income and happiness tend to go together? The visualization here shows that the answer to this question is yes, both within and across countries.

It may take a minute to wrap your head around this visualization, but once you do, you can see that it handily condenses the key information from the previous three charts into one.

To show the income-happiness correlation across countries, the chart plots the relationship between self-reported life satisfaction on the vertical axis and GDP per capita on the horizontal axis. Each country is an arrow on the grid, and the location of the arrow tells us the corresponding combination of average income and average happiness.

To show the income-happiness correlation within countries, each arrow has a slope corresponding to the correlation between household incomes and self-reported life satisfaction within that country. In other words, the slope of the arrow shows how strong the relationship between income and life satisfaction is within that country. (This chart gives you a visual example of how the arrows were constructed for each country). 7

If an arrow points northeast, that means richer people tend to report higher life satisfaction than poorer people in the same country. If an arrow is flat (i.e., points east), that means rich people are, on average, just as happy as poorer people in the same country.

As we can see, there is a very clear pattern: richer countries tend to be happier than poorer countries (observations are lined up around an upward-sloping trend), and richer people within countries tend to be happier than poorer people in the same countries (arrows are consistently pointing northeast).

People in richer countries tend to be happier, and within all countries, richer people tend to be happier

It’s important to note that the horizontal axis is measured on a logarithmic scale. The cross-country relationship we would observe on a linear scale would be different since, at high national income levels, slightly higher national incomes are associated with a smaller increase in average happiness than at low levels of national incomes. In other words, the cross-country relationship between income and happiness is not linear on income (it is ‘log-linear’). We use the logarithmic scale to highlight two key facts: (i) at no point in the global income distribution is the relationship flat, and (ii) a doubling of the average income is associated with roughly the same increase in the reported life satisfaction, irrespective of the position in the global distribution.

These findings have been explored in more detail in a number of recent academic studies. Importantly, the much-cited paper by Stevenson and Wolfers (2008)8 shows that these correlations hold even after controlling for various country characteristics, such as the demographic composition of the population, and are robust to different sources of data and types of subjective well-being measures.