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The Effects of Income Levels and Income Inequalities on Happiness

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Abstract

The standard of living reflected by one’s income and consumption is the primary explanation for the utility or satisfaction of the private consumer. However, empirical evidence very often demonstrates that the level of happiness is not necessarily higher for wealthy people in comparison to the poor. This holds within specific populations of a country, and in macro terms by comparison between the happiness of populations with low and high GDPppp per capita. Different research studies have used other economic and social explanatory variables for determining consumer happiness within countries. The present paper adds the new factor of income inequality that affects happiness. It is empirically proved that at extreme values of inequality measured by the Gini index, the effect of happiness is negative regardless of GDPppp per capita. However, at the intermediate ranges of the Gini index the effect of changes in the index on happiness is ambiguous. These results are found regardless of the actual values of GDPppp per capita.

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Authors and Affiliations

  1. Department of Economics and Management, Yezreel Valley College, Yezreel Valley, Israel

    T. Tavor

  2. Department of Economics and Business Administration, Ariel University, Ariel, Israel

    L. D. Gonen

  3. Department of Management, Faculty of Business Administration, Ono Academic College, Kiryat Ono, Israel

    M. Weber

  4. Department of Management, Bar-Ilan University, Ramat Gan, Israel

    M. Weber & U. Spiegel

  5. Department of Economics, University of Pennsylvania, Philadelphia, PA, USA

    U. Spiegel

  6. Zefat College, Zefat, Israel

    U. Spiegel

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Tavor, T., Gonen, L.D., Weber, M. et al. The Effects of Income Levels and Income Inequalities on Happiness. J Happiness Stud 19, 2115–2137 (2018). https://doi.org/10.1007/s10902-017-9911-9

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