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Income, inequality, and subjective well-being: an international and intertemporal perspective using panel data

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  • Gruen Carola

    (The World Bank, Washington, U.S.A.)

  • Klasen Stephan

    (Universität Göttingen, Göttingen, Deutschland)

Abstract

In this paper we present new quantitative results on the linkages between absolute income levels, relative incomes, income inequality, and attitudes towards redistribution in a large sample of countries over the past 30 years. While we find that absolute income levels have a significant but very small effect on well-being, we find that relative incomes matter much more. In addition, we find that preferences for inequality are a significant driver of well-being. Lastly, we observe that overall inequality has an additional negative impact on well-being in a country in all three country-groupings. Taken together, this suggests that inequality has a rather strong negative impact on well-being. In fact, depending on the context, reducing inequality can do more to promote subjective well-being than increasing economic growth.

Suggested Citation

  • Gruen Carola & Klasen Stephan, 2013. "Income, inequality, and subjective well-being: an international and intertemporal perspective using panel data," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 54(1), pages 15-35, June.
    • Handle: RePEc:bpj:jbwige:v:54:y:2013:i:1:p:15-35:n:2
    DOI: 10.1524/jbwg.2013.0002
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    Cited by:

    1. Kaiser, Caspar F. & Vendrik, Martinus, 2018. "Different versions of the Easterlin Paradox: New evidence for European countries," Research Memorandum 026, Maastricht University, Graduate School of Business and Economics (GSBE).

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