Since the nineteenth century, economists have worked with models which posit extrinsic factors, such as the subject’s income and the income of others, as determinants of happiness and discontent.
In the discipline of psychology, however, self-actualization theory stresses instead the importance of intrinsic values as determinants of subjective well-being.
My paper tests empirically the hypothesis that self-actualization theory and intrinsic values can explain differences in happiness at the national level. Its novelty is that, instead of measuring the causal relationship from extrinsic rewards to happiness, it measures the causal relationship from preoccupation with intrinsic rewards to happiness. Multiple regressions tested the correlation at the national level between countries’ reported happiness and focus on extrinsic/intrinsic values. Backwards stepwise regressions selected “valuing hard work” and “valuing imagination” as indicators of a preoccupation with extrinsic and intrinsic values respectively. The data used were collected between 2010 and 2019 and the sample consisted of all 49 countries for which data were available. The analysis found that, after accounting for per capita incomes, a preoccupation with extrinsic values was negatively correlated with happiness (p = 0.009), the feeling of having enough money (p = 0.011), life satisfaction (p = 0.001) and the feeling of having an ideal job (p = 0.001). Meanwhile, a preoccupation with intrinsic values was positively correlated with the feeling of having enough money (p = 0.002), with life satisfaction (p = 0.021) and the feeling of having an ideal job (p = 0.000). As a specific application of this finding, it is shown that countries of the former socialist bloc exhibit (i) a comparatively low preoccupation with intrinsic values/self-actualization (ii) lower levels of happiness than their incomes would predict, and (iii) a higher responsiveness of happiness to income than other countries. This novel application of self-actualization theory to the country level, underpinned by powerful regression results, suggests that strengthening a nation’s preoccupation with intrinsic values could be an element of national policy and international development cooperation.