Misclassification Errors of Subjective Well-being : A New Approach to Map Happiness

As a measure of welfare, the growth of subjective well-being (SWB) is among the most critical aims in human society. However, self-reported well-being is potentially subject to significant misclassification errors. We employ a novel method from the measurement error literature, which relaxes the classical assumption on measurement error, to correct measures of reported happiness in 79 countries. Our findings suggest that there are substantial misclassification errors in the reported happiness, and the patterns of discrepancy between the reported and corrected SWB are heterogenous over countries. Utilizing the corrected SWB to reexamine the Easterlin paradox and modified-Easterlin hypothesis, we find evidence indicating that although reported SWB is not significantly associated with GDP per capita, the corrected measure of SWB is. We find no evidence for a happiness satiation point as defined in previous studies