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  • August 2004
  • Article
  • Journal of Public Economics

Inequality and Happiness: Are Europeans and Americans Different?

By: Rafael Di Tella, Alberto Alesina and Robert MacCulloch
  • Format:Print
  • | Pages:34
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Abstract

We study the effect of the level of inequality in society on individual well-being using a total of 123,668 answers to a survey question about “happiness”. We find that individuals have a lower tendency to report themselves happy when inequality is high, even after controlling for individual income, a large set of personal characteristics, and year and country (or, in the case of the US, state) dummies. The effect, however, is more precisely defined statistically in Europe than in the US. In addition, we find striking differences across groups. In Europe, the poor and those on the left of the political spectrum are unhappy about inequality; whereas in the US the happiness of the poor and of those on the left is uncorrelated with inequality. Interestingly, in the US, the rich are bothered by inequality. Comparing across continents, we find that left-wingers in Europe are more hurt by inequality than left-wingers in the US. And the poor in Europe are more concerned with inequality than the poor in America, an effect that is large in terms of size but is only significant at the 10% level. We argue that these findings are consistent with the perception (not necessarily the reality) that Americans have been living in a mobile society, where individual effort can move people up and down the income ladder, while Europeans believe that they live in less mobile societies.

Keywords

Equality and Inequality; Happiness; Global Range; Local Range; United States; Europe

Citation

Di Tella, Rafael, Alberto Alesina, and Robert MacCulloch. "Inequality and Happiness: Are Europeans and Americans Different?" Journal of Public Economics 88, nos. 9-10 (August 2004): 2009–42.
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About The Author

Rafael M. Di Tella

Business, Government and the International Economy
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More from the Authors
  • The Political Economy of a 'Miracle Cure': The Case of Nebulized Ibuprofen and Its Diffusion in Argentina By: Sebastian Calónico, Rafael Di Tella and Juan Cruz Lopez Del Valle
  • Keep Your Enemies Closer: Strategic Platform Adjustments during U.S. and French Elections By: Rafael Di Tella, Randy Kotti, Caroline Le Pennec and Vincent Pons
  • The Trouble with TCE By: Vincent Pons and Rafael Di Tella
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