Skip to main content

Advertisement

Log in

Inequality and happiness: Insights from Latin America

  • Published:
The Journal of Economic Inequality Aims and scope Submit manuscript

Abstract

Inequality is a contentious topic in economics, and its effect on individual welfare remains an open question. We address this question from the perspective of a novel approach in economics – the study of happiness. In this discussion, we draw from our research on the topic, which is based on new empirical evidence from Latin America. We find several differences from studies conducted in the United States and Europe, especially regarding the role of perceptions of mobility and status. We find that inequality has negative effects on happiness in Latin America, where it seems to be a signal of persistent unfairness. Our research also examines the effects of several variables, including wealth, status, and reference group size, on the link between inequality and happiness, with the presumption that these variables can help us identify the channels through which inequality operates as a signaling mechanism.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  1. Aitchison, J. and Brown, J.A.C.: The lognormal distribution, with special reference to its use in economics, Cambridge University Press, New York, 1957.

    Google Scholar 

  2. Alesina, A., Di Tella, R. and MacCulloch, R.: Inequality and happiness: Are Europeans and Americans different?, Journal of Public Economics 88 (2004), 2009–2042.

    Article  Google Scholar 

  3. Benabou, R. and Ok, E.: Social Mobility and the Demand for Redistribution: The POUM Hypothesis, NBER Working Papers 6795, National Bureau of Economic Research, Inc., 1998.

  4. Birdsall, N., Behrman, J. and Szekely, M.: Pobreza, Desigualdad, y Liberalización Comercial y Financiera en América Latina, In: E. Ganuza, R. Paes de Barros, L. Taylor and R. Vos (eds.), Liberalización, Desigualdad, y Pobreza: América Latina y el Caribe en los 1990s, Buenos Aires, Universidad de Buenos Aires, 2001.

    Google Scholar 

  5. Blanchflower, D. and Oswald, A.: Well-being over time in Britain and the USA, Journal of Public Economics 88 (2004), 1359–1387.

    Article  Google Scholar 

  6. Clark, A.: Inequality-aversion and income mobility: A direct test, DELTA Working Papers (2003).

  7. Clark, A. and Oswald, A.: Unhappiness and unemployment, Economic Journal 104 (1994), 648–659.

    Article  Google Scholar 

  8. Cummins, R. and Gullone, E. (eds.): The universality of subjective wellbeing indicators: A multi-disciplinary and multi-national perspective, Kluwer Academic Publishers, Boston, 2002.

    Google Scholar 

  9. Diener, E. and Biswas-Diener, R.: Income and subjective well-being: Will money make us happy?, 2000 (Mimeo).

  10. Di Tella, R. and MacCulloch, R.: Income, happiness and inequality as measures of welfare, 2003 (Mimeo).

  11. Di Tella, R., MacCulloch, R. and Oswald, A.: Preferences over inflation and unemployment: Evidence from surveys of happiness, American Economic Review 91(1) (2001), 335–341.

    Article  Google Scholar 

  12. Easterlin, R.: Does economic growth improve the human lot? Some Empirical evidence, In: P. David and M. Reder (eds.), Nations and Households in Economic Growth, Academic Press, New York, 1974.

    Google Scholar 

  13. Eggers, A., Gaddy, C. and Graham, C.: Unemployment and well being in Russia in the 1990’s: Can society’s suffering be individuals’ solace?, Journal of Socio-Economics (forthcoming).

  14. Graham, C. and Felton, A.: Does Inequality Matter to Individual Welfare: An Initial Exploration Based on Happiness Surveys from Latin America, Center on Social and Economic Dynamics Working Papers No. 38, The Brookings Institution, Washington, D.C., 2005.

  15. Graham, C. and Felton, A.: Complex Socio-Economic and Political Challenges in Central Asia: A Birds’ Eye View from the Economics of Happiness, The Brookings Institution, Washington, D.C., 2005 (Mimeo).

    Google Scholar 

  16. Graham, C. and Pettinato, S.: Happiness, markets and democracy: Latin America in comparative perspective, Journal of Happiness Studies 2(3) (2001), 237–268.

    Article  Google Scholar 

  17. Graham, C and Pettinato, S.: Happiness and Hardship: Opportunity and Insecurity in New Market Economics, Brookings Institution Press, Washington, D.C., 2002.

    Google Scholar 

  18. Graham, C. and Sukhtankar, S.: Is economics crisis reducing support for markets and democracy in Latin America? Some evidence from surveys of public opinion and well being, Journal of Latin America Studies 36 (2004), 349–377.

    Article  Google Scholar 

  19. Graham, C. and Young, P.: Ignorance Fills the Income Gulf, The Boston Globe, June 23, 2003.

  20. Hagerty, M.: Social comparisons of income in one’s community: Evidence from National Surveys of Income and Happiness (1999), (Mimeo).

  21. Luttmer, E.: Neighbors as negatives: Relative earnings and well-being (2004), (Mimeo).

  22. McMurrer, D., Sawhill, I.: Getting Ahead: Economic and Social Mobility in the United States, Urban Institute, Washington, D.C., 1998.

    Google Scholar 

  23. Moene, K. and Wallertein, M.: Earnings inequality and welfare spending: A disaggregated analysis, World Politics 55(4) (2003).

  24. Pritchett, L. and Filmer, D.: Estimating wealth effects without expenditure of data - or tears: An application to enrollments in states of India, Demography 39(1) (February 2001), 115–132 (2001).

    Google Scholar 

  25. Senik, C.: When information dominates comparison. Learning from Russian subjective panel data, Journal of Public Economics 88 (2004), 2099–2133.

    Article  Google Scholar 

  26. Tomes, N.: Income distribution, happiness, and satisfaction: A direct test of the Interdependent Preference Model, Journal of Economic Psychology 7 (1986), 425–446.

    Article  Google Scholar 

  27. VTsIOM Press Release no. 113, Moskva glazami Rossiyan [Moscow as seen by Russians], September 3, 2004. Available athttp://www.wciom.ru.

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Carol Graham.

Additional information

This article is based on a longer research paper [14], which is under review for publication.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Graham, C., Felton, A. Inequality and happiness: Insights from Latin America. J Econ Inequal 4, 107–122 (2006). https://doi.org/10.1007/s10888-005-9009-1

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10888-005-9009-1

Key words

Navigation