Area-Level Income Inequality and Individual Happiness: Evidence from Japan

In this study, we investigated how area-level income inequality is associated with an individual’s assessment of happiness, based on micro-level data sourced from nationwide surveys in Japan. It was confirmed from our analysis using logit models that individuals who live in areas of high income inequality tend to report themselves as being less happy, even after controlling for various individual and area-level factors. The association between inequality and happiness is modestly significant, regardless of the choice of covariates at an individual level, and stronger at a lower level of perceived happiness. Moreover, sensitivity to inequality differs substantially according to certain individual attributes. Among others, an important implication for social policy is that those with unstable occupational status are more sensitive to inequality. Given that these people tend to be less happy than others, this result indicates the risk that area-level inequality further reduces the well-being of those with unfavorable employment conditions.     

Income inequality and happiness

Using General Social Survey data from 1972 to 2008, we found that Americans were on average happier in the years with less national income inequality than in the years with more national income inequality. We further demonstrated that this inverse relation between income inequality and happiness was explained by perceived fairness and general trust. That is, Americans trusted other people less and perceived other people to be less fair in the years with more national income inequality than in the years with less national income inequality. The negative association between income inequality and happiness held for lower-income respondents, but not for higher-income respondents. Most important, we found that the negative link between income inequality and the happiness of lower-income respondents was explained not by lower household income, but by perceived unfairness and lack of trust.     

Income inequality and interpersonal trust in China

Two studies investigated the cross‐temporal and cross‐sectional associations between income inequality and interpersonal trust in China. In Study 1, a cross‐temporal meta‐analysis involving 141 studies (N = 64,853) found that Chinese college students’ scores on the Interpersonal Trust Scale (Rotter, 1967) decreased 0.54 SD from 1998 to 2016, and that the decline in interpersonal trust across birth cohorts was explained by earlier income inequality index in China. In Study 2, a cross‐regional analysis showed that Chinese citizens in provinces with more income inequality (vs. less inequality) perceived the local government to be less trustworthy and, in turn, reported lower levels of interpersonal trust. These findings contribute to the understanding of the rising income inequality as an explanation for the waning interpersonal trust in China, and point to a crucial channel connecting income inequality with interpersonal trust.     

Income Inequality and Subjective Wellbeing: Trends,Challenges, and Research Directions

Research findings on the consequences of income inequality for subjective wellbeing (i.e. life satisfaction and happiness) remain inconclusive. Some researchers report a positive spill-over from income inequality, others report negative effects, and still others find no significant outcomes whatsoever. Therefore, it remains unclear whether people living in areas of high income disparity feel better off or less well off than people living in environments where everyone is more equal. This paper provides a critical discussion of recent research on the inequality-wellbeing link and suggests strategies for social scientists seeking new insights into the consequences of income inequality for subjective welfare.     

收入与幸福的关系及其现实意义

收入与幸福的关系一直饱受争议。文章在分析已有研究成果的基础上,总结出收入与幸福之间的曲线关系:在低收入水平下,收入的增加会导致幸福水平的显著提升,当收入一旦达到能够满足人们基本生活需要的水平之后,它对幸福的积极效应就会被社会比较、适应和欲望等心理因素削弱。基于这种关系,要提高中国人民的幸福感,一方面需要社会的人文关怀与公平调整,特别是制度设计,另一方面需要个人的努力奋斗和心理调节。     

Economic Freedom,Income Inequality and Life Satisfaction in OECD Countries

Since Piketty’s Capital in the 21st Century in 2014, scientific interest into the impact of income inequality on society has been on the rise. However, little is known about the mediating role of income inequality in the relationship between market institutions and subjective well-being. Using panel analysis on a sample of 21 OECD countries to test the effects of five different types of economic freedom on income inequality, we find that fiscal freedom, free trade and freedom from government regulation increase income inequality, whereas sound money decreases income inequality. Income inequality is found to have a negative effect on life satisfaction. Mediation tests show that income inequality mediates the influence of fiscal freedom, free trade and freedom from government regulation on life satisfaction.     

What wealth-happiness paradox? A short note on the American case

Happiness scholars have tried to resolve the seeming paradox that as Americans’ wealth increased substantially over the last few decades, their happiness did not. This article questions whether the paradox is real. Demonstrations of the paradox almost always rely on GDP per capita as the measure of wealth, but that is a poor measure of a people’s well-being. It is heavily and increasingly skewed; it does not account for effort. Using instead measures of household income, male income, and average wages eliminates the paradox; these indicators of affluence have grown only slowly or declined in the same period, paralleling the changes in happiness scores. Moreover, using these indicators reveals a modest but real correlation between material well-being and national happiness.     

Why are conservatives happier than liberals?

In this research, we drew on system-justification theory and the notion that conservative ideology serves a palliative function to explain why conservatives are happier than liberals. Specifically, in three studies using nationally representative data from the United States and nine additional countries, we found that right-wing (vs. left-wing) orientation is indeed associated with greater subjective well-being and that the relation between political orientation and subjective well-being is mediated by the rationalization of inequality. In our third study, we found that increasing economic inequality (as measured by the Gini index) from 1974 to 2004 has exacerbated the happiness gap between liberals and conservatives, apparently because conservatives (more than liberals) possess an ideological buffer against the negative hedonic effects of economic inequality.     

Subjective Wellbeing and Income: Empirical Patterns in the Rural Developing World

A commonality in the economics of happiness literature is that absolute income matters more for the subjective wellbeing of people at low income levels. In this article, we use a large sample of people in rural areas of developing countries with relatively low income levels to test whether subjective wellbeing an increasing function of absolute income in our sample, and to analyze the existence of adaptation and social comparison effects on subjective wellbeing. Our sample includes 6,973 rural households in 23 countries throughout Asia, Africa, and Latin America. The average total income per adult equivalent in our sample was US$ 1555, whereas levels of subjective wellbeing resembled levels found in previous research using cross-country data. We find that, despite low levels of absolute income, levels of subjective wellbeing of our respondents resemble levels found in previous research using cross-country data. We also find remarkable similarities in many of the determinants of subjective wellbeing previously tested. Our data show that absolute income covariates with subjective wellbeing, but—as for richer samples—the magnitude of the association is lower once we control for adaptation and social comparison. Finally, our results suggest that social comparison has a stronger effect than adaptation in explaining the subjective wellbeing of our sample. Our findings highlight the importance of adaptation and social comparison even at low levels of absolute income.     

Social comparisons of income in one's community: evidence from national surveys of income and happiness

Two studies provide evidence for social comparison effects of income on subjective well-being (SWB). The 1st study of 7,023 persons from nationally representative samples in the United States shows that the range and skew of the income distribution in a community affects a person's happiness, as predicted by range-frequency theory. The 2nd study of 8 nations over a period of 25 years shows that decreasing the skew (inequality) of the income distribution in a country increases average national SWB. Both studies strongly support social comparison effects of income within a community, and both results are predicted by range-frequency theory. These studies are the first to successfully extend earlier results of R. H. Smith, E. Diener, and D. H. Wedell (1989) from the laboratory into naturalistic situations. The magnitude of the social comparison effects is smaller than the main effect of income, which implies that nations can avoid creating a "hedonic treadmill."     

The paradox of happiness: towards an alternative explanation

There is a common empirical finding in many countries that substantial increases in real per capita income do not correspond to equivalent increases of individual happiness. These findings have puzzled many economists that some have called the “paradox of happiness”. There have been a number of explanations regarding this paradox. This paper attempts to tackle the paradox of happiness by employing the idea of hierarchical choice. The hierarchical approach implies that there are some basic human needs which must be satisfied before non-basic needs come into the picture. The paper argues that the hierarchical structure of needs implies that the satisfaction of basic needs provides substantial increases to individual happiness compared to the subsequent satisfaction of secondary needs. This might also be an alternative explanation of empirical findings showing a positive relationship between income and happiness up to certain level of income. It can also be combined with existing explanations of the paradox and thus enhance our understanding of the issue.

Happiness, Income, and Beyond

This commentary to Carol Graham’s paper deals with the nature of the relationship between income and happiness. Carol Graham focuses her contribution on what I call the positive-coefficient hypothesis in economic theory; which states that, on average, well-being rises with income. The hypothesis was first questioned by Richard Easterlin’s pioneering work and it has captured a lot of attention from happiness researchers during the last decade. My contribution deals with a related hypothesis, which I call the close-relationship hypothesis in economic theory. The hypothesis states that a person’s income is a good predictor of his or her well-being. I show that this hypothesis is rejected by happiness research, and I discuss the implications of this rejection.     

Which Ethics Will Make us Individually and Socially Happier? A Cross-Culture and Cross-Development Analytical Model

This paper provides an analytical model representing four polar ethical approaches drawn from the main ethical positions suggested by the philosophical, psychological, and socio-economic literature. Moreover, it develops the model in order to obtain rankings of the four approaches in terms of happiness and, consequently, to provide insights into which ethical approach should best be adopted by each individual, according to his characteristics (income level, in developed countries (DCs) or in less developed countries (LDCs), aspiration level): some dynamics are also predicted, if the Golden and the Copper Rules are applied. Finally, this paper provides insights into which ethical approach should best be adopted by each society, according to its characteristics (DCs or LDCs, social distribution of aspiration levels), by predicting happiness levels in alternative countries, according to the prevailing ethics, and by comparing these predictions with the observed happiness levels, thus providing an empirical test of the analytical model: some dynamics are again predicted, with non-Protestant DCs moving to higher, and Protestant DCs towards lower, happiness levels (conditioned to the per capita income), due to the increasing and decreasing rejection of the Golden and Copper Rules, respectively, and with LDCs moving to lower (conditioned to the increasing per capita income) in the short-run and higher happiness levels in the long run, by establishing and entertaining conditions that set clear incentives for moral behaviour, in order to increase and decrease the adoption of the Golden and Copper Rules, respectively.     

Objective and Subjective Socioeconomic Status as Sources of Status-Legitimacy Effect and Legitimation of Income Inequality

System justification theory proposes that people are motivated to perceive the existing social system as fair, legitimate, and desirable. However, status-legitimacy effect, understood as the most disadvantaged living in the most unequal contexts experiencing this need most strongly, has only found mixed support in empirical works. This article presents a comprehensive test of the original reading of status-legitimacy hypothesis which implied that those with lower objective status are the most motivated to system justify and of the respecified version that posits subjective powerlessness to be the driver of undue system legitimization. Multilevel mixed-effects linear regression analysis of International Social Survey Programme modules on social inequality, covering almost 50,000 respondents from 28 countries, shows that the mean effects of both subjective and objective status are in line with predictions of economic rationality. To model contextual inequality, we distinguish between an objective measure, Gini, and perceived amounts of income differences as reported by respondents. The analysis testing contextual moderation lends support for the original reading of status-legitimacy hypothesis—the objectively, rather than subjectively, disadvantaged experience greater motivation to defend the system.     

Individual and Contextual Factors of Happiness and Life Satisfaction in a Low Middle Income Country

Understanding individual and contextual factors of happiness and life satisfaction in a low- and middle-income country setting are important in the study of subjective well-being. This study aims to examine individual and contextual factors of happiness and life satisfaction in one of the happiest countries in the world: Indonesia. Data comes from the Indonesian Family Life Survey 2014 (N _individual = 31,403; N _household = 15,160; N _district = 297). Results from a three-level ordered logit model show that factors of happiness and life satisfaction are beyond individual factors. Happiness and life satisfaction are also strongly associated with factors within an individual’s household and at the district government level. Individuals living in households with better economic welfare are happier and more satisfy. Poor health and unemployment have a detrimental effect on happiness and life satisfaction. Individuals living in districts whose governments’ better deliver public services are happier and more satisfy. In contrast, those living in areas with conflict and violence is less happy and satisfy. Individual religiosity and community social capital in the form of indigenous tradition benefit individual happiness and life satisfaction.     

Does More Money Make You Happier? Why so much Debate?

Easterlin’s famous paradox questioned standard economic assumptions about a fundamental relationship in economics: that between happiness and income. In recent years there has been renewed debate about the paradox. In this essay, I highlight some of the methodological issues and challenges underlying that debate. I focus on the sensitivity of the results to the method selected, the choice of micro or macro data, and the way that happiness questions are defined and framed, all of which result in divergent conclusions. I also note the mediating role of the pace and nature of economic growth, institutional frameworks, and inequality. What is most notable is the remarkable consistency in the determinants of individual happiness – including income – within countries of diverse income levels and, at the same time, how happiness is affected by cross-country differences that are related to average per-capita income levels, such as political freedom and public goods. Income clearly plays a role in determining both individual and country level happiness. Still, assessing its role relative to other more difficult to measure factors as countries develop in new ways and at different rates will remain a challenge for the foreseeable future.     

Level and Inequality of Happiness in Nations: Does Greater Happiness of a Greater Number Imply Greater Inequality in Happiness?

Utilitarians and egalitarians have different priorities. Utilitarians prioritize the greatest level of happiness in society and are prepared to accept inequality, while egalitarians prioritize the smallest differences and are willing to accept a loss of happiness for this purpose. In theory these moral tenets conflict, but do they really clash in practice? This question is answered in two steps. First I consider the relation between level and inequality of happiness in nations; level of happiness is measured using average responses to a survey question on life satisfaction and inequality is measured with the standard deviation. There appears to be a strong negative correlation; in nations where average happiness is high, the standard deviation tends to be low. This indicates harmony instead of tension. Secondly I consider the institutional factors that are likely to affect happiness. It appears that level and equality of happiness depend largely on the same institutional context, which is another indication for harmony. We may conclude that the discussion between utilitarians and egalitarians is of little practical importance. This conclusion implies that increasing income inequality can go together with decreasing inequality in happiness and this conclusion provides moral support for Governments developing modern market economics     

Do economic equality and generalized trust inhibit academic dishonesty? Evidence from state-level search-engine queries

What effect does economic inequality have on academic integrity? Using data from search-engine queries made between 2003 and 2011 on Google and state-level measures of income inequality and generalized trust, I found that academically dishonest searches (queries seeking term-paper mills and help with cheating) were more likely to come from states with higher income inequality and lower levels of generalized trust. These relations persisted even when controlling for contextual variables, such as average income and the number of colleges per capita. The relation between income inequality and academic dishonesty was fully mediated by generalized trust. When there is higher economic inequality, people are less likely to view one another as trustworthy. This lower generalized trust, in turn, is associated with a greater prevalence of academic dishonesty. These results might explain previous findings on the effectiveness of honor codes.     

Testing the status-legitimacy hypothesis: A multilevel modeling approach to the perception of legitimacy in income distribution in 36 nations

The status-legitimacy hypothesis was tested by analyzing cross-national data about social inequality. Several indicators were used as indexes of social advantage: social class, personal income, and self-position in the social hierarchy. Moreover, inequality and freedom in nations, as indexed by Gini and by the human freedom index, were considered. Results from 36 nations worldwide showed no support for the status-legitimacy hypothesis. The perception that income distribution was fair tended to increase as social advantage increased. Moreover, national context increased the difference between advantaged and disadvantaged people in the perception of social fairness: Contrary to the status-legitimacy hypothesis, disadvantaged people were more likely than advantaged people to perceive income distribution as too large, and this difference increased in nations with greater freedom and equality. The implications for the status-legitimacy hypothesis are discussed.