The present paper examines the empirical literature on the Economics of Happiness with the aim both to comparatively evaluate the state of the art in Latin America, and to propose a research hypothesis able to contribute to the improvement of the understanding of the determinants of happiness in our continent. On the basis of both the empirical research made in developed countries, particularly the work of Stutzer (2004) about Switzerland, and the work of Graham and Pettinato (2002) about Peru, we elaborate an explaining hypothesis of the Easterlin Paradox for Latin America, one that tries to achieve the same level of complexity of Stutzer’s (2004) hypothesis, which combines in one and the same proposal the three theoretical explanations of the Easterlin Paradox proposed in the literature. Our hypothesis implies to include as a determinant of the happiness equation one component of relative income, which in turn includes, together with a social comparison mechanism, a subjective evaluation, as to the future prospect of personal income, of the risks and opportunities coming from the interplay between some personal characteristics (such as age, educational level, place of residence, relative income level, gender, etc.) and some characteristics of the economic context (such as the unemployment rate, the poverty rate, the Human Development Index, the Gini Index, etc.) Such a hypothesis entails to test a happiness equation which includes an element of social comparison of the Hirschman-type (Hirschman 1973), and some elements coming from de so called macroeconomics of happiness. The available evidence on the Economics of Happiness in Latin America supports the plausibility of the proposed hypothesis.
