Inequality and Happiness

12 Pages Posted: 28 Oct 2014

See all articles by Ada Ferrer-i-Carbonell

Ada Ferrer-i-Carbonell

Institut d'Anàlisi Econòmica (IAE-CSIC), Barcelona

Xavier Ramos

Universitat Autònoma de Barcelona; Institute for the Study of Labor (IZA)

Date Written: December 2014

Abstract

In recent years there has been an accumulation of empirical evidence suggesting that individuals dislike inequality. The literature has built upon estimating the degree of this dislike as well as its causes. The use of self‐reported measures of satisfaction or well‐being as a proxy for utility has been one of the empirical strategies used to this end. In this survey, we review the papers that estimate or examine the relationship between inequality and self‐reported happiness to conclude that inequality correlates negatively with happiness in Western societies. Some of the surveyed papers identify particular sources of heterogeneity on preferences over inequality. The evidence for non‐Western societies is more mixed and less reliable. Notwithstanding that, trust in the institutions seems to play an important role in shaping the relationship between income inequality and subjective well‐being. We conclude with suggestions for further research.

Keywords: Happiness, Inequality, Inequality aversion

Suggested Citation

Ferrer-i-Carbonell, Ada and Ramos, Xavier, Inequality and Happiness (December 2014). Journal of Economic Surveys, Vol. 28, Issue 5, pp. 1016-1027, 2014. Available at SSRN: https://ssrn.com/abstract=2515606 or http://dx.doi.org/10.1111/joes.12049

Ada Ferrer-i-Carbonell (Contact Author)

Institut d'Anàlisi Econòmica (IAE-CSIC), Barcelona ( email )

Barcelona, Bellaterra 08193
Spain

Xavier Ramos

Universitat Autònoma de Barcelona ( email )

Dept. Economia Aplicada
Campus UAB
Bellaterra, Barcelona 08193
Spain

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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