Does Income Inequality Make Us Less Happy?
Abstract
This article presents evidence from Australia showing linkages between income inequality in an individual's local area and that individual's life satisfaction. Higher income inequality is associated unambiguously with lower self-rated life satisfaction. In contrast to expectations that inequality may primarily be an issue of concern for poorer individuals, the relationship holds more strongly for higher-income households and is insignificant for lower-income households. Estimating shadow prices, we find that an average Australian would require an increase in household income of about $5,188 (in 2007 dollars) to compensate ...
View more >This article presents evidence from Australia showing linkages between income inequality in an individual's local area and that individual's life satisfaction. Higher income inequality is associated unambiguously with lower self-rated life satisfaction. In contrast to expectations that inequality may primarily be an issue of concern for poorer individuals, the relationship holds more strongly for higher-income households and is insignificant for lower-income households. Estimating shadow prices, we find that an average Australian would require an increase in household income of about $5,188 (in 2007 dollars) to compensate for the decreased life satisfaction resulting from increased income inequality over the 2001-2007 period.
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View more >This article presents evidence from Australia showing linkages between income inequality in an individual's local area and that individual's life satisfaction. Higher income inequality is associated unambiguously with lower self-rated life satisfaction. In contrast to expectations that inequality may primarily be an issue of concern for poorer individuals, the relationship holds more strongly for higher-income households and is insignificant for lower-income households. Estimating shadow prices, we find that an average Australian would require an increase in household income of about $5,188 (in 2007 dollars) to compensate for the decreased life satisfaction resulting from increased income inequality over the 2001-2007 period.
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Journal Title
Australian Economic Review
Volume
48
Issue
1
Subject
Economics
Welfare economics
Applied economics
Econometrics
Economic theory