A Note on the Concavity of the Happiness Function in Family Support

Abstract

[Abstract] In the happiness literature, there is an extensive debate about the diminishing marginal utility of income. However, this issue is neglected when considering another critical driver of happiness, social capital, and specifically, family support. The latter has been defended as a possible explanation of the relatively high happiness levels in Latin America. In this note, we present a preliminary comparison of the marginal impact of family support and income on the levels of happiness for Latin Americans and USA citizens. The primary goal is to discuss the possibility of diminishing returns to family support. By using different measures of family support and different models, we find that the marginal effect on happiness of income and family support are higher in the region with lower average endowments of those variables. In addition, the contribution of family support to happiness is systematically higher than the contribution of income. However, the assumption of a non-linear contribution of family support seems not to be crucial to understanding the relative impact of this variable on happiness for the individual with mean support in Latin American and the United States. More research is needed to improve our measures of family support and to understand their effects on happiness.