Working Paper: NBER ID: w21900
Authors: Leonard Goff; John F. Helliwell; Guy Mayraz
Abstract: The link between happiness and overall inequality is best studied using an index that incorporates different aspects of inequality, and is measured consistently in different countries. One such index is the degree to which happiness itself varies among individuals. Its correlation with both happiness levels and social trust is substantially stronger than the corresponding correlation for income inequality. This remains so after allowing for bounded scale reporting, including a purely ordinal measure of dispersion. Moreover, the correlation is stronger for individuals who profess to care most about inequality. The link between happiness and inequality may thus be stronger than previously appreciated.
Keywords: subjective wellbeing; inequality; happiness; SWL; life satisfaction
JEL Codes: D63; I31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Inequality may directly cause lower satisfaction with life (I14) | Various mechanisms such as resentment or powerlessness (D74) |
| Higher SWL dispersion (D39) | Lower levels of SWL (I30) |
| Higher SWL dispersion (D39) | Lower levels of SWL among those who care more about inequality (I14) |
| SWL levels and SWL dispersion correlation is stronger among individuals preferring to reduce income inequality (D31) | True relationship rather than mechanical artifact (L15) |
| Correlation between SWL levels and dispersion remains significant after controlling for various factors (C29) | Not solely a result of reporting biases (C83) |