Inequality and Happiness: Are Americans and Europeans Different?

By A. Alesina, R. Tella, R. McCulloch. 2004

2,013 citations recorded by the source corpus.

The answer to the question posed in the title is 'yes.' Using a total of 128,106 answers to a survey question about happiness,' we find that there is a large, negative and significant effect of inequality on happiness in Europe but not in the US. There are two potential explanations. First, Europeans prefer more equal societies (inequality belongs in the utility function for Europeans but not for Americans). Second, social mobility is (or is perceived to be) higher in the US so being poor is not seen as affecting future income. We test these hypotheses by partitioning the sample across income and ideological lines. There is evidence of inequality generated' unhappiness in the US only for a sub-group of rich leftists. In Europe inequality makes the poor unhappy, as well as the leftists. This favors the hypothesis that inequality affects European happiness because of their lower social mobility (since no preference for equality exists amongst the rich or the right). The results help explain the greater popular demand for government to fight inequality in Europe relative to the US.

Subfields: Social Psychology, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/11b0aaa0923226264bff73713d9c027f73530fb6

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Citations in the corpus

Suffer the little children: Measuring the effects of parenthood on well-being worldwide (2012, neutral): “The studies that do report results on the relationship between having children and well-being generally find either non-significant or negative effects (e.g. Di Tella et al., 2003, Alesina et al., 2004, and Clark, 2006).”
Entrepreneurship and well-being: The role of psychological autonomy, competence, and relatedness (2019, background): “…the previous research examining the effect of entrepreneurship on well-being (relative to traditional wage-employment) has done so without mediation of key psychological variables (e.g., Alesina et al., 2004; Alvarez and Sinde-Cantorna, 2014; Binder and Coad, 2013; Blanchflower and Oswald, 1998).”
The role of income aspirations in individual happiness (2004, neutral): “Empirical studies that focus on individuals’ distributive concerns and which use data on reported subjective well-being are e.g. Alesina et al. (2001), Hagerty (2000) Schwarze and Härpfer (2002) and Tomes (1986).”
Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being (2008, methodology): “Individual data has shown equality to be negatively related to SWB in Latin America (Graham & Felton, 2006) and the US (Hagerty, 2000), although Alesina et al. (2004) find this result to be only significant for the rich. In contrast, Senik (2004) finds inequality to have no significant effect on SWB”
Experienced Utility as a Standard of Policy Evaluation (2005, background): “The effect of whether the political party one supports is governing has been measured, and it has been found to be small (Alesina et al. 2004).”
Happiness, freedom and control (2009, methodology): “(2)Note that this paper will use the concepts of utility and happiness as one concept and measure it with life satisfaction as in Easterlin (2001) or Alesina et al. (2004).”
Why Horizontal Inequalities Matter: Some Implications for Measurement. (2005, background): “Empirical research has investigated how far self-assessed happiness correlates with relative as well as absolute position with mixed results, but on the whole, in developing countries and Europe, relative impoverishment seems to be a source of unhappiness, although not in the US where inequality is ”
Revisiting the Evidence for a Cardinal Treatment of Ordinal Variables (2015, neutral): “Another much‐cited study by Alesina et al. (2004) finds that individuals have a lower tendency to report themselves happy when inequality is high using ordered logit regressions. FCF (2004) and several follow‐up studies use fixed effects ordered models to investigate the determinants of ”