Income Inequality and Well-Being in the U.S.: Evidence of Geographic-Scale- and Measure-Dependence

29 Pages Posted: 6 Sep 2016

See all articles by John Ifcher

John Ifcher

Santa Clara University - Leavey School of Business - Economics Department

Homa Zarghamee

Santa Clara University - Leavey School of Business

Carol Graham

Brookings Institution - Center on Social and Economic Dynamics; University of Maryland

Abstract

U.S. income inequality has risen dramatically in recent decades. Researchers consistently find that greater income inequality measured at the state or national level is associated with diminished subjective well-being (SWB) in the U.S. We conduct the first multi-scale analysis (i.e., at the ZIP-code, MSA, and state levels) of the inequality-SWB relationship using SWB data from the U.S. Gallup Healthways Well-Being Index and income inequality data from the American Community Survey. We use the rich set of well-being measures afforded by the dataset (evaluative, positive- and negative-affective hedonic, and health measures) to examine the consistency of the relationship. We find that the relationship is both scale-dependent and measure-dependent: income inequality is SWB-diminishing in large regions for all measures, SWB-diminishing in small regions for negative-affective hedonic measures, and SWB-improving in small regions for most other measures. Lastly, we find that taking all regions together, the net relationship between income inequality and SWB is negative.

Keywords: subjective well-being, income inequality, happiness, distribution of income, health, scale-dependence, measure-dependence

JEL Classification: D3, I14, D6

Suggested Citation

Ifcher, John and Zarghamee, Homa and Graham, Carol, Income Inequality and Well-Being in the U.S.: Evidence of Geographic-Scale- and Measure-Dependence. IZA Discussion Paper No. 10155. Available at SSRN: https://ssrn.com/abstract=2834185

John Ifcher (Contact Author)

Santa Clara University - Leavey School of Business - Economics Department ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

Homa Zarghamee

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

Carol Graham

Brookings Institution - Center on Social and Economic Dynamics ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
(202) 797-6022 (Phone)
(202) 797-2968 (Fax)

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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