Association for Public Policy Analysis & Management

Understanding the relationship between income, economic policy, and subjective well-being is salient question for the human and sciences and public policy. An emerging literature on the role of economic policy and income in shaping subjective well-being has often reached mixed and contradictory conditions. In contrast, a large body of evidence demonstrates the considerable positive effects of income on objective well-being. Some possible causes on these divergent findings are likely because early studies on subjective well-being suffer from many philosophical, economic, and econometric limitations. This project on the other hand seeks to improve upon earlier work by taking advantage of the improved conceptualization of subjective well-being and incorporating detailed individual data for the United States to rigorously econometrical measure the effect of income and economic well-being on subjective well-being. Notably, I exploit exogenous variation in state income tax policy to estimate reduced form intentiont to treat regression models that examine the effect of income taxes on subjective well-being.