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Income Inequality Explains Why Economic Growth Does Not Always Translate to an Increase in Happiness

Shigehiro Oishi¹; Selin Kesebir²

¹ Department of Psychology, University of Virginia · ² Department of Organisational Behaviour, London Business School

One of the most puzzling social science findings in the past half century is the Easterlin paradox: Economic growth within a country does not always translate into an increase in happiness. We provide evidence that this paradox can be partly explained by income inequality. In two different data sets covering 34 countries, economic growth was not associated with increases in happiness when it was accompanied by growing income inequality. Earlier instances of the Easterlin paradox (i.e., economic growth not being associated with increasing happiness) can thus be explained by the frequent concurrence of economic growth and growing income inequality. These findings suggest that a more even distribution of growth in national wealth may be a precondition for raising nationwide happiness.

DOI

10.1177/0956797615596713

Volume

26 (10)

Pages

1630-1638

Language

en

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Sources

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