Research findings on the consequences of income inequality for subjective wellbeing (i.e. life satisfaction and happiness) remain inconclusive. Some researchers report a positive spill-over from income inequality, others report negative effects, and still others find no significant outcomes whatsoever. Therefore, it remains unclear whether people living in areas of high income disparity feel better off or less well off than people living in environments where everyone is more equal. This paper provides a critical discussion of recent research on the inequality-wellbeing link and suggests strategies for social scientists seeking new insights into the consequences of income inequality for subjective welfare.
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Clark (2003) and Blanchflower and Oswald (2003) are the only studies that, to the best of my knowledge, have not yet been published in a peer-reviewed journal. They are significant for research into income inequality and subjective welfare, however, and merit inclusion here. Studies examining the variance in subjective wellbeing as an outcome variable (e.g. Delhey and Kohler 2011) are not considered in this overview; nor are classical studies on relative income, often measured by the distance between an individual income and the income of a larger aggregate (e.g. Dittmann and Goebel 2010; Luttmer 2005; Shields et al. 2009) or studies that tackle the relationship between income inequality and other outcome variables (e.g. Costa and Kahn 2003; Lynch and Kaplan 1997; Wilkinson 1999, 2000).
I view the re-coding procedure of the authors as problematic. The transformation of a lower scale (4-points) into a larger scale (10-points) does not guarantee comparability with a question originally asked on the larger scale as the authors assume.
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Schneider, S.M. Income Inequality and Subjective Wellbeing: Trends, Challenges, and Research Directions. J Happiness Stud 17, 1719–1739 (2016). https://doi.org/10.1007/s10902-015-9655-3
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