On the Relation Between Income Inequality and Happiness: Do Fairness Perceptions Matter?
Open access
Date
2009-12Type
- Working Paper
ETH Bibliography
yes
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Abstract
In this paper, we revisit the association between happiness and inequality. We argue that the perceived fairness of the income generation process affects this association. Building on a two-period model of individual life-time utility maximization, we predict that persons with higher perceived fairness will experience higher levels of life-time utility and are less in favor of income redistribution. In societies with a high level of actual social mobility, income inequality is perceived more positively with increased expected fairness. The opposite is expected for countries with low actual social mobility, due to an increasing relevance of a disappointment effect resulting from unsuccessful individual investments. Using the World Values Survey data and a broad set of fairness measures, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective well-being). We also find strong empirical support for the disappointment effect in low social mobility countries. In contrast, the results for high-mobility countries turn out to be ambiguous. Show more
Permanent link
https://doi.org/10.3929/ethz-a-005946710Publication status
publishedJournal / series
KOF Working PapersVolume
Publisher
KOF Swiss Economic Institute, ETH ZurichSubject
LIFE QUALITY; SOCIAL INEQUALITY (ETHICS); EINKOMMENSVERTEILUNG; Fairness; Justice; GLÜCK (ETHIK); WOHLFAHRTSÖKONOMIK; Happiness; LEBENSQUALITÄT; HAPPINESS (ETHICS); SOZIALE UNGLEICHHEIT (ETHIK); Political ideology; SOCIAL WELFARE (WELFARE SYSTEM); Redistribution; WELFARE ECONOMICS; SOZIALHILFE (SOZIALWESEN); Inequality; Income distribution; INCOME DISTRIBUTION; Subjective well-being; Life satisfaction; World Values SurveyOrganisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
Notes
Weiterer Autor: Jan Schnellenbach.More
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ETH Bibliography
yes
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