Abstract:

Governments want to provide a better life for their citizens all over the world. It is common thinking that people living in a country with a higher GDP, have a higher life satisfaction level. Richard Easterlin firstly challenged this idea, supporting that increases after a certain point in GDP are meaningless for people in developed countries. There are many studies that both support and criticize this idea, called “Easterlin Paradox”. This study aims to examine Easterlin Paradox in developing countries and determine the economic determinants of life satisfaction. BRICS-T countries namely Brazil, Russia, India, China, South Africa and Turkey are selected as proxies for emerging economies. GDP per capita, inflation and unemployment are used as variables. Study results show that GDP has still an important role in life satisfaction in developing countries. However, it is not the only determinant to specify. Our empirical model shows that GDP and inflation have a positive effect on life satisfaction whereas unemployment has a negative effect. Since developing countries have different characteristics from developed countries, it can be said that Easterlin paradox is not so valid. According to study results, governments of developing countries should try to increase GDP while decreasing unemployment.

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