The motivation of my research was that despite several decades with significant GDP growth life satisfaction levels have not increased, for example for Japan, the US and European countries like Belgium. Several scholars have debated this puzzle and no convincing line of thought has been able to dominate the field. The initial idea of this thesis was that citizens would react on a deviation from the expected level from GDP growth and this would have an impact on well-being. The important controversy about the impact of GDP on happiness was aided by my research and I could supplement the existing literature with a novel approach. The results of this study were that two country groups emerged. GIPS countries differ from the rest of the EZ. In this context the theory of welfare models was reviewed. As possible explanations equity, culture, labor market institutions and the initial level of income were considered. The current sovereign debt crisis in Europe focuses on Mediterranean countries which lost competitiveness. In conclusion, an association between Eurozone member countries citizens’ life satisfaction and the cyclical component of GDP exists for Spain, Portugal, Italy and Greece but not for others EZ countries. Hence, we can see two country groups in the Eurozone of which one adapts to a deviation of trend growth and another one which does not. Further, the causes of the different associations in the Eurozone can be partly explained by social welfare models and the resulting variations in inequality levels in the systems. Besides, econometric analyses showed that youth unemployment is an important factor for life satisfaction in Southern European countries. Moreover, a study on an individual level provided evidence that poverty and inequality correlate negatively with life satisfaction. Furthermore, the implications from my results for the design and future of the Eurozone for some Mediterranean member countries are that if the road to regain competitiveness through internal devaluation is too long disintegration might be advisable. Ceteris paribus, high unemployment, depressed economic output and cuts in government spending as well as tax increases would keep life satisfaction levels down. However, leaving the Eurozone would lower GDP levels and life satisfaction in the short run but could enable positive and progressive growth opportunities thereafter. As a result continuous increases in life satisfaction levels would be expected in the medium run due to positive cyclical components. In a nutshell it seems that it would be better to make a painful break than draw out the agony.