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

Gruen Carola and Stephan Klasen

Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, 2013, vol. 54, issue 1, 15-35

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.

Keywords: life satisfaction; income; inequality; panel data (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:jbwige:v:54:y:2013:i:1:p:15-35:n:2

DOI: 10.1524/jbwg.2013.0002

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