Income inequality and happiness

Two interesting and somewhat related items of interest on income inequality and happiness/well-being.

First, a collection of short essays from various Canadian writers (economists, political scientists, philosophers) from the Canadian Centre for Policy Alternatives (CCPA), entitled, Why Inequality Matters in 1,000 Words or Less. Canada’s income gap between the richest and poorest is continuing to widen, and these authors reflect on the implications of this growing inequality.

Second, a pair of researchers from Washingont’s Brookings Institute (Betsey Stevenson and Justin Wolfers) have recently offered up evidence that seems to refute the Easterlin paradox, a long-standing theory (based on observation) that while happiness increased with income to a certain level, beyond that point there was no relation. Money, it was believed, could only buy happiness to a certain degree.

But thanks to the surfeit of data now available for re-examining this phenomenon, Stevenson and Wolfers were able to re-evaluate the question, and have come to the conclusion that, apparently, more money generally does correlate with greater happiness.

Graph charting income against self-reported happiness

The new research does not, of course, overcome the inherent difficulties in comparing happiness across cultures when understandings of happiness (as well as aspirations, expectations) vary considerably, as Easterlin himself points out.

In the same vein, of course, there is no way to control for the possibility of self-deception. How many people who are actually unhappy would report being happy? I think it’s more than just plausible that the very wealthy would be biased towards describing themselves as happy–to be making $500k a year and describing yourself as unhappy would be essentially admitting defeat. You would be admitting that all you hard worked for, the dream life you were living, was a sham.

The impossibility of sorting out the complexity of self-reported happiness levels, I think, means that you’re never going to get a definitive answer on these questions.

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