Economic inequality is not “bad for everyone”, new research shows – wealthier people derive happiness benefits
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Increases in economic inequality raise the life satisfaction of wealthier people, while lowering the life satisfaction of people who earn less, newly published research shows.
The study, by Dr David Bartram of the 鶹Ƶ, investigated inequality and life satisfaction trends in wealthy countries over the period 1990 to 2019.
The overall effect of increased inequality (as measured by the Gini coefficient) is a slight decrease in average life satisfaction. But when the analysis considers higher earners and lower earners separately, the result is a diverging trend of life satisfaction, with higher earners benefitting while lower earners suffer losses.
The research () rebuts earlier studies suggesting that economic inequality is bad for everyone, higher earners and lower earners alike. The idea that inequality is “bad for everyone” is also a key message of the popular book The Spirit Level, by Richard Wilkinson and Kate Picket.
“The idea that even wealthier people suffer from economic inequality might be comforting, but it isn’t true”, said Dr Bartram, Associate Professor of Sociology at the 鶹Ƶ. “Earlier studies gave insufficient attention to other variables that influence this relationship. When we control for those other factors, a clear diverging trend appears.
“This research is consistent with the idea that the relationship between income and life satisfaction is mainly about relative status, not about consumption. As economic inequality increases, people who earn more can ‘look down’ on those who earn less to an even greater degree. Granted, it’s not a terribly attractive tendency.
“It was never obvious why increased inequality would undermine the life satisfaction of higher earners. I’m now convinced it doesn’t. It makes more sense that inequality benefits the economic ‘winners.’”
The study used data from the World Values Survey and the European Values Study conducted in wealthy countries including the UK, the USA, Mexico, Canada, Australia, Japan, South Korea, and a wide range of European countries.