More Unequal in Income, More Unequal in Wellbeing

We use the terms subjective wellbeing and happiness interchangeably. Happiness, life satisfaction, and subjective wellbeing do overlap. Although they are to some degree distinct, in the happiness literature it is customary to treat these concepts interchangeably (see e.g., Veenhoven 2008; Frey and Stutzer 2002; Diener and Lucas 1999; Radcliff 2013).

There was a lively discussion between Veenhoven and Delhey, and it resulted in many papers (http://​scholar.​google.​com/​scholar?​q=​veenhoven+delhey​+inequality). This debate, however, is beyond the scope of this article, which deals with the US and changes over time, not cross-sectional comparisons across countries. The results of the present study do not necessarily conflict with Berg and Veenhoven (2010), who found that across nations there is no correlation between income inequality and average happiness. It is even possible that income inequality can add to average happiness in many countries by increasing the pie, though probably not anymore in the US—some economists think that current levels of inequality in the US are bad for the economy. Income inequality can actually hurt the economy, not only society (The Economist 2012a, b, 2013). Stevenson and Wolfers (2008) found happiness inequality to be decreasing, but they did not establish a connection with income inequality. Easterlin (2001) focused on happiness by income, but only at one point in time. Blanchflower and Oswald (2004) looked at change over time, but at the effect of income on happiness, not on the effect of income inequality on happiness inequality.

General reduction of inequality in happiness or reduction between some two groups, say racial groups, can co-exist with increasing inequality in the happiness across income groups. Taking Using a public health analogy, the life expectancy gap between Blacks and Whites has decreased but the life expectancy gap between the educated and the uneducated has increased (Meara et al. 2008).

We are grateful for this suggestion to an anonymous reviewer who pointed out a need: “to find a convincing way of handling trends other than the increase in inequality, which may be causing changes in the level and distribution of happiness.”

However, the Easterlin Paradox is observed in many countries, and our explanation may not hold up across the board—we are grateful for this point to Richard Easterlin.