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GINI DP 38: Inequality and Happiness: A Survey

  • Ada Ferrer-i-carbonell

    ()

    (Campus U.A.B., Institut d'Anàlisi Econòmica, IAE(CSIC))

  • Ramos, X. (Xavier)

In recent years there has been an accumulation of empirical evidence suggesting that individuals dislike inequality (Alesina and Giuliano, 2011 and Dawes et al., 2007). The literature has built upon estimating the degree of this dislike as well as its causes. The use of self-reported measures of satisfaction or well-being as a proxy for utility has been one of the empirical strategies used to this end. In this survey we review the papers that estimate or examine the relationship between inequality and self-reported happiness, and find that inequality reduces happiness in Western societies. The evidence for non-Western societies is more mixed and less reliable. Notwithstanding that, trust in the institutions seems to play an important role in shaping the relationship between income inequality and subjective wellbeing. We conclude with suggestions for further research.

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Paper provided by AIAS, Amsterdam Institute for Advanced Labour Studies in its series GINI Discussion Papers with number 38.

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Date of creation: May 2012
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Handle: RePEc:aia:ginidp:38
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  1. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
  2. Erzo F.P. Luttmer, 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," NBER Working Papers 10667, National Bureau of Economic Research, Inc.
  3. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
  4. Bruno Frey & Matthias Benz & Alois Stutzer, 2004. "Introducing Procedural Utility: Not Only What, but Also How Matters," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(3), pages 377-, September.
  5. Ed Hopkins, 2008. "Inequality, Happiness and Relative Concerns: What Actually is their Relationship?," ESE Discussion Papers 180, Edinburgh School of Economics, University of Edinburgh.
  6. Giuliano, Paola & Spilimbergo, Antonio, 2009. "Growing Up in a Recession: Beliefs and the Macroeconomy," CEPR Discussion Papers 7399, C.E.P.R. Discussion Papers.
  7. Yann Algan & Pierre Cahuc & Marc Sangnier, 2014. "Trust and the Welfare State: The Twin Peaks Curve," AMSE Working Papers 1424, Aix-Marseille School of Economics, Marseille, France, revised Jun 2014.
  8. Irena Grosfeld & Claudia Senik, 2010. "The emerging aversion to inequality," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(1), pages 1-26, 01.
  9. Alberto Alesina & Rafael Di Tella & Robert MacCulloch, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," NBER Working Papers 8198, National Bureau of Economic Research, Inc.
  10. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
  11. Angeletos, George-Marios & Alesina, Alberto, 2005. "Corruption, Inequality, and Fairness," Scholarly Articles 4553006, Harvard University Department of Economics.
  12. Benabou, R. & Ok, E.A., 1998. "Social Mobility and the Demand for Redistribution: The POUM Hypothesis," Working Papers 98-23, C.V. Starr Center for Applied Economics, New York University.
  13. Morawetz, David, 1977. "Income Distribution and Self-Rated Happiness: Some Empirical Evidence," Economic Journal, Royal Economic Society, vol. 87(347), pages 511-22, September.
  14. Ferrer-i-Carbonell, Ada & Ramos, Xavi, 2010. "Inequality Aversion and Risk Attitudes," IZA Discussion Papers 4703, Institute for the Study of Labor (IZA).
  15. Tomes, Nigel, 1986. "Income distribution, happiness and satisfaction: A direct test of the interdependent preferences model," Journal of Economic Psychology, Elsevier, vol. 7(4), pages 425-446, December.
  16. Eggers, Andrew & Gaddy, Clifford & Graham, Carol, 2006. "Well-being and unemployment in Russia in the 1990s: Can society's suffering be individuals' solace?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 209-242, April.
  17. Algan, Yann & Cahuc, Pierre & Sangnier, Marc, 2011. "Efficient and Inefficient Welfare States," CEPR Discussion Papers 8229, C.E.P.R. Discussion Papers.
  18. Schwarze, Johannes & Harpfer, Marco, 2007. "Are people inequality averse, and do they prefer redistribution by the state?: Evidence from German longitudinal data on life satisfaction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 233-249, April.
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