Racial Differences in the Income-Well-Being Gradient

Abstract

This paper investigates the relationship between income and subjective well-being across racial groups. Utilizing data for millions of Americans, mainly from the Gallup Daily Poll, we find significant differences in the income-well-being gradient among racial groups. Whites experience a steeper gradient, gaining more well-being per dollar than Blacks and Asians. These results cannot be explained by well-being pessimism among minorities, as Whites are actually most pessimistic about their future well-being at every observed income level. Policy makers who aim to maximize societal well-being would need to consider such heterogeneity. However, survey results show strong opposition to race-based redistributive policies, even if they enhance overall happiness, raising ethical and practical considerations for policymakers.

Keywords: subjective well-being, race, income-well-being gradient, redistribution