IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The Drivers of Happiness Inequality: Suggestions for Promoting Social Cohesion

  • Becchetti, Leonardo


    (University of Rome Tor Vergata)

  • Massari, Riccardo


    (Sapienza University of Rome)

  • Naticchioni, Paolo


    (University of Rome 3)

This paper identifies and quantifies the contribution of a set of covariates in affecting levels and over time changes of happiness inequality. Using a decomposition methodology based on RIF regression, we analyse the increase in happiness inequality observed in Germany between 1992 and 2007, using the German Socio-Economic Panel (GSOEP) database, deriving the following findings. First, trends in happiness inequality are mainly driven by composition effects, while coefficient effects are negligible. Second, among composition effects, education has an inequality-reducing impact, while the increase in unemployment contributes to the rise in happiness inequality. Third, the increase in average income has a reducing impact on happiness inequality, while the raise in income inequality cannot be considered as a driver of happiness inequality trends. A clear cut policy implication is that policies enhancing education and economic performance contribute to reduce happiness inequality and the potential social tensions arising from it.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7153.

in new window

Length: 35 pages
Date of creation: Jan 2013
Date of revision:
Publication status: published in: Oxford Economic Papers, 2014, 66(2), 419-442
Handle: RePEc:iza:izadps:dp7153
Contact details of provider: Postal:
IZA, P.O. Box 7240, D-53072 Bonn, Germany

Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page:

Order Information: Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Alesina, Alberto F & Di Tella, Rafael & MacCulloch, Robert, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," CEPR Discussion Papers 2877, C.E.P.R. Discussion Papers.
  2. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
  3. Veblen, Thorstein, 1899. "The Theory of the Leisure Class," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1899.
  4. Guven, Cahit & Senik, Claudia & Stichnoth, Holger, 2009. "You Can't Be Happier than Your Wife: Happiness Gaps and Divorce," IZA Discussion Papers 4599, Institute for the Study of Labor (IZA).
  5. ,, 2008. "Principles of Management Accounting: The Question Book," OUP Catalogue, Oxford University Press, number 9780195986372, December.
  6. Shiqing Jiang & Ming Lu & Hiroshi Sato, 2008. "Happiness in the dual society of urban China:Hukou identity, horizontal inequality and heterogeneous reference," LICOS Discussion Papers 22308, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  7. Allison, R. Andrew & Foster, James E., 2004. "Measuring health inequality using qualitative data," Journal of Health Economics, Elsevier, vol. 23(3), pages 505-524, May.
  8. 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).
  9. Erreygers, Guido, 2009. "Correcting the Concentration Index: A reply to Wagstaff," Journal of Health Economics, Elsevier, vol. 28(2), pages 521-524, March.
  10. Guimarães, Bernardo & Sheedy, Kevin D., 2012. "A Model of Equilibrium Institutions," CEPR Discussion Papers 8855, C.E.P.R. Discussion Papers.
  11. Frijters, Paul & Beatton, Tony, 2012. "The mystery of the U-shaped relationship between happiness and age," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 525-542.
  12. Bernard M. S. van Praag, 2007. "Perspectives from the Happiness Literature and the Role of New Instruments for Policy Analysis," CESifo Economic Studies, CESifo, vol. 53(1), pages 42-68, March.
  13. Johannes Gernandt & Friedhelm Pfeiffer, 2007. "Rising Wage Inequality in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(4), pages 358-380, August.
  14. Tomi Ovaska & Ryo Takashima, 2010. "Does a Rising Tide Lift All the Boats? Explaining the National Inequality of Happiness," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 44(1), pages 205-224, March.
  15. Leonardo Becchetti & Sara Savastano, 2009. "The money-happiness relationship in transition countries: evidence from Albania," Econometica Working Papers wp11, Econometica.
  16. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  17. Firpo, Sergio Pinheiro & Fortin, Nicole M & Lemieux, Thomas, 2012. "Occupational tasks and changes in the wage structure," Textos para discussão 284, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  18. Stevenson, Betsey & Wolfers, Justin, 2008. "Happiness Inequality in the United States," IZA Discussion Papers 3624, Institute for the Study of Labor (IZA).
  19. Clark, Andrew E. & Oswald, Andrew J., 1994. "Satisfaction and comparison income," CEPREMAP Working Papers (Couverture Orange) 9408, CEPREMAP.
  20. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
  21. Bert G.M. Van Landeghem, 2008. "Human Well-Being over the Life Cycle: Longitudinal Evidence from a 20-Year Panel," LICOS Discussion Papers 21308, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  22. Leonardo Becchetti & Riccardo Massari & Paolo Naticchioni, 2011. "The drivers of happiness inequality: Suggestions for promoting social cohesion," Working Papers 2011-06, Universita' di Cassino, Dipartimento di Scienze Economiche.
  23. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, 05.
  24. Nicole Fortin & Thomas Lemieux & Sergio Firpo, 2010. "Decomposition Methods in Economics," NBER Working Papers 16045, National Bureau of Economic Research, Inc.
  25. Nidardo, J. & Fortin, N. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Papers 93-94-15, California Irvine - School of Social Sciences.
  26. Veblen, Thorstein, 2009. "The Theory of the Leisure Class," OUP Catalogue, Oxford University Press, number 9780199552580 edited by Banta, Martha, December.
  27. 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.
  28. Schirle, Tammy, 2009. "Income Inequality Among Seniors in Canada: The Role of Women's Labour Market Experience," CLSSRN working papers clsrn_admin-2009-68, Vancouver School of Economics, revised 28 Dec 2009.
  29. Hirschman, Albert O., 1973. "The changing tolerance for income inequality in the course of economic development," World Development, Elsevier, vol. 1(12), pages 29-36, December.
  30. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
  31. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
  32. Dustmann, Christian & Ludsteck, Johannes & Schönberg, Uta, 2007. "Revisiting the German Wage Structure," IZA Discussion Papers 2685, Institute for the Study of Labor (IZA).
  33. Francesco Ferrante, 2009. "Education, Aspirations and Life Satisfaction," Kyklos, Wiley Blackwell, vol. 62(4), pages 542-562, November.
  34. Erreygers, Guido, 2009. "Correcting the Concentration Index," Journal of Health Economics, Elsevier, vol. 28(2), pages 504-515, March.
  35. Thorstein Veblen, 1899. "Mr. Cummings's Strictures on "The Theory of the Leisure Class"," Journal of Political Economy, University of Chicago Press, vol. 8, pages 106.
  36. Chi, Wei & Li, Bo, 2008. "Glass ceiling or sticky floor? Examining the gender earnings differential across the earnings distribution in urban China, 1987-2004," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 243-263, June.
  37. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," PSE Working Papers halshs-00590436, HAL.
  38. Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Investigating the Patterns and Determinants of Life Satisfaction in Germany Following Reunification," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
  39. Dennis Petrie & Kam Ki Tang, 2008. "A Rethink on Measuring Health Inequalities Using the Gini Coefficient," Discussion Papers Series 381, School of Economics, University of Queensland, Australia.
  40. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
  41. Wagstaff, Adam & Paci, Pierella & van Doorslaer, Eddy, 1991. "On the measurement of inequalities in health," Social Science & Medicine, Elsevier, vol. 33(5), pages 545-557, January.
  42. Carol Graham & Andrew Felton, 2006. "Inequality and happiness: Insights from Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 107-122, April.
  43. 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.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7153. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.