Another Study Confirms Inequality Matters
Despite great increases in GDP American’s over the past 50 years do not report being more happy. In other countries a direct relationship between economic growth and happiness has been observed but not in the U.S. Oishi et al. (2011) find a clue for the the possible reason.
Specifically, the authors found an inverse relationship between income inequality, as measured by the Gini coefficient, and happiness, as depicted in the following graph. As inequality increased from 1972 to 2008 in the U.S., happiness scores of American citizens decreased.
Taking the analysis further with a multilevel mediation analysis the authors found this inverse relation between income inequality and happiness was explained by perceived fairness and general trust, as depicted in the following model showing the relationship between income inequality and happiness mediated by ‘general trust’ and ‘perceived happiness’.
The inverse relationship between societal income inequality and
individual-level happiness is explained in the model by perceived fairness
and general trust.
“That is, Americans trusted other people less and perceived other people to be less fair in the years with more national income inequality than in the years with less national income inequality. The negative association between income inequality and happiness held for lower-income respondents, but not for higher-income respondents. Most important, we found that the negative link between income inequality and the happiness of lower-income respondents was explained not by lower household income, but by perceived unfairness and lack of trust.”
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Reference
Oishi, S., Kesebir, S., and Diener, E. (2011). Income inequality and happiness. Psychological Science. 22(9) 1095–1100.