The Happiness Paradox: Economic Growth vs. Declining Well-Being

In 58% of countries, happiness levels have declined over the past decade despite economic progress, unveils the World Happiness Report 2025. This disconnect suggests that traditional socioeconomic indicators may not fully capture people's overall well-being. However, personal perceptions of life quality and happiness play a crucial role in shaping labor market decisions and broader societal trends. The shift in focus, that separated life satisfaction from economic measures, was accelerated by the COVID-19 pandemic as it reinforced the importance of non-material factors in determining quality of life, states ILO. 

“Across OECD countries, people spend around 6 hours per week interacting with friends and family, a tiny fraction of the time they spend working”, says Rosina Gammarano, Senior Labour Statistician, ILO. On average, 12.4% of the population are unsatisfied with how they use their time, and 6.4% with their lives in general, states Gammarano. Yet, in Mexico, 7.7% reported to be unsatisfied with their time use, and 3.0% with their lives in general. 

A recent study on workplace happiness in Latin America placed Mexico in fourth position among regional countries, with an average employee happiness score of 81%, reports MBN. Yet, the study found that there was lower job satisfaction among younger generations. Heightened awareness of mental and emotional well-being, high expectations for work that aligns with personal values, and the pressures of constant connectivity through technology and social media, are some of the factors that reported frustration, especially when the work environment failed to meet Generation Z’s standards. Meanwhile, young people in North America and Western Europe have reported sharper declines in happiness, reversing a long-standing trend where youth generally exhibited higher life satisfaction than older generations.

While government interventions have helped stabilize income and employment outcomes, non-economic aspects of well-being, including perceived job security and interpersonal relationships, have deteriorated since the pandemic, reports OECD.

Subjective wellbeing metrics, such as happiness scores and life satisfaction surveys, can often predict behaviors more accurately than traditional economic indicators. A study by Kaiser and Oswald demonstrated that happiness ratings can be more predictive of life decisions—including job changes and relocations—than a combination of standard socioeconomic measures. Economic resources primarily drive short-term changes in well-being, whereas long-term changes are more influenced by social capital, cultural values, and perceptions of inequality, according to a study performed in Germany. 

People will not sacrifice their lives for work anymore, writes Aye Kalenok, Founder and CEO, Kala Talent, for MBN.  “What happened? Did people suddenly stop wanting better jobs? Higher salaries? Recognition? Status? Of course not. People still want growth, but first, they want to define it for themselves, and second, they are not willing to do anything to get it,” adds Kalenok. 

The gap between objective economic indicators and subjective well-being is also evident in consumer sentiment trends. Historically, consumer confidence indices have been strong predictors of economic health, but in recent years, this correlation has weakened. The University of Michigan’s Consumer Sentiment Index, for example, has remained low despite positive economic data, suggesting a growing divergence between how people perceive the economy and its actual performance.

Trust and security concerns may contribute to this disconnect. The 2024 Edelman Trust Barometer revealed that rapid technological changes are often viewed more as risks than opportunities. Additionally, a significant portion of the population feels that existing economic systems are not working for them, reinforcing uncertainty about the future. This sense of insecurity, both in employment and in broader societal structures, may overshadow material improvements in living standards.

Changes in job structures, digitalization, remote work, and evolving employment relationships have altered the traditional work experience. Technology has made it easier than ever to move between corporate jobs, freelance work, consulting, and even entrepreneurship. Switching industries, locations, and roles is now a common career move, writes Kalenok. “The traditional career ladder does not make sense anymore because people want to redefine not just their career path but also their personal growth,” adds Kalenok. 

Efforts to measure subjective well-being have grown in recognition of these trends. Initiatives such as the World Happiness Report, the European Quality of Life Survey, and the OECD Better Life Index integrate both objective and subjective indicators to assess overall well-being. These frameworks acknowledge that while economic stability is crucial, perceptions of security, fairness, and personal fulfillment are equally important in determining life satisfaction.