The Role of Social Ties in Explaining Heterogeneity in the Association Between Economic Growth and Subjective Well-Being

Whether economic growth improves subjective well-being has been under debate. Studies that find such an association also document heterogeneity between countries in the magnitude of the relationship. We test a theoretical model in which economic growth enhances subjective well-being only when a large share of the population derives their subjective well-being from relational goods with positive externalities instead of positional goods with negative externalities. The choice between relational and positional goods is determined by individuals’ relational abilities and expectations which we operationalize as attachment security. We specifically test whether economic growth improves subjective well-being more in those countries where the average attachment security is higher. We find support for the hypothesis in the Eurobarometer data but less support in the World Values Survey data.