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The Great Happiness Moderation

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Author Info

  • Andrew E. Clark

    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), IZA - Institute for the Study of Labor - IZA)

  • Sarah Flèche

    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA))

  • Claudia Senik

    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), UP4 - Université Paris 4, Paris-Sorbonne - Université Paris IV - Paris Sorbonne - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)

Abstract

This paper shows that within-country happiness inequality has fallen in the majority of countries that have experienced positive income growth over the last forty years, in particular in developed countries. This new stylized fact comes as an addition to the Easterlin paradox, which states that the time trend in average happiness is flat during episodes of long-run income growth. This mean-preserving declining spread in happiness comes about via falls in both the share of individuals who declare low and high levels of happiness. Rising income inequality moderates the fall in happiness inequality, and may even reverse it after some point, for example in the US starting in the 1990s. Hence, if raising the income of all does not raise the happiness of all, it will at least harmonize the happiness of all, providing that income inequality does not grow too much. Behind the veil of ignorance, lower happiness inequality would certainly be considered as attractive by risk-averse individuals.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00707290.

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Date of creation: Jun 2012
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Handle: RePEc:hal:wpaper:halshs-00707290

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Related research

Keywords: Happiness ; Inequality ; Economic growth ; Development ; Easterlin paradox;

References

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  1. Clark, Andrew E. & Senik, Claudia, 2010. "Will GDP Growth Increase Happiness in Developing Countries?," CEPREMAP Working Papers (Docweb) 1024, CEPREMAP.
  2. Richard Layard & Guy Mayraz & Stephen Nickell, 2009. "Does relative income matter? Are the critics right?," LSE Research Online Documents on Economics 28594, London School of Economics and Political Science, LSE Library.
  3. Ruut Veenhoven, 2005. "Return of Inequality in Modern Society? Test by Dispersion of Life-Satisfaction Across Time and Nations," Journal of Happiness Studies, Springer, vol. 6(4), pages 457-487, December.
  4. van Praag, Bernard M. S., 2007. "Perspectives from the Happiness Literature and the Role of New Instruments for Policy Analysis," IZA Discussion Papers 2568, Institute for the Study of Labor (IZA).
  5. Wim Kalmijn & Ruut Veenhoven, 2005. "Measuring Inequality of Happiness in Nations: In Search for Proper Statistics," Journal of Happiness Studies, Springer, vol. 6(4), pages 357-396, December.
  6. Stevenson, Betsey & Wolfers, Justin, 2008. "Happiness Inequality in the United States," IZA Discussion Papers 3624, Institute for the Study of Labor (IZA).
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  8. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
  9. Alois Stutzer, . "The Role of Income Aspirations in Individual Happiness," IEW - Working Papers 124, Institute for Empirical Research in Economics - University of Zurich.
  10. Bernard Praag, 2011. "Well-being inequality and reference groups: an agenda for new research," Journal of Economic Inequality, Springer, vol. 9(1), pages 111-127, March.
  11. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 2(3), pages 337-369.
  12. Ferrer-i-Carbonell, Ada & van Praag, Bernard M. S., 2003. "Income Satisfaction Inequality and its Causes," IZA Discussion Papers 854, Institute for the Study of Labor (IZA).
  13. Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007. "Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," IZA Discussion Papers 2840, Institute for the Study of Labor (IZA).
  14. James H. Stock & Mark W. Watson, 2003. "Has the Business Cycle Changed and Why?," NBER Chapters, in: NBER Macroeconomics Annual 2002, Volume 17, pages 159-230 National Bureau of Economic Research, Inc.
  15. Di Tella, Rafael & MacCulloch, Robert, 2008. "Gross national happiness as an answer to the Easterlin Paradox?," Journal of Development Economics, Elsevier, vol. 86(1), pages 22-42, April.
  16. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
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  18. Senik, Claudia, 2006. "Ambition and Jealousy: Income Interactions in the "Old" Europe versus the "New" Europe and the United States," IZA Discussion Papers 2083, Institute for the Study of Labor (IZA).
  19. Proto, Eugenio & Rustichini, Aldo, 2012. "Life Satisfaction, Household Income and Personality Traits," The Warwick Economics Research Paper Series (TWERPS) 988, University of Warwick, Department of Economics.
  20. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
  21. Richard Easterlin, 2005. "Diminishing Marginal Utility of Income? Caveat Emptor," Social Indicators Research, Springer, vol. 70(3), pages 243-255, 02.
  22. Di Tella, R. & MacCulloch, R.J.: Oswald, A.J., 1997. "The Macroeconomics of Happiness," Papers 19, Centre for Economic Performance & Institute of Economics.
  23. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
  24. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
  25. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
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  27. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  28. repec:pri:cheawb:deaton_income_health_and_wellbeing_around_the_world_evidence_%20from_gallup_world_poll_jep_spring2008 is not listed on IDEAS
  29. Indranil Dutta & James Foster, 2011. "Inequality of Happiness in US: 1972-2008," The School of Economics Discussion Paper Series 1110, Economics, The University of Manchester.
  30. Richard Easterlin, 2005. "Feeding the Illusion of Growth and Happiness: A Reply to Hagerty and Veenhoven," Social Indicators Research, Springer, vol. 74(3), pages 429-443, December.
  31. Easterlin, Richard A. & Angelescu McVey, Laura, 2009. "Happiness and Growth the World Over: Time Series Evidence on the Happiness-Income Paradox," IZA Discussion Papers 4060, Institute for the Study of Labor (IZA).
  32. Jan Ott, 2010. "Greater Happiness for a Greater Number: Some Non-controversial Options for Governments," Journal of Happiness Studies, Springer, vol. 11(5), pages 631-647, October.
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