Fiscal conservatives might tell you that inequality is an inevitable and salutary side effect of the free enterprise system. In the U.S., after all, income inequality tends to be the most pronounced in highly innovative economies such as New York or the Silicon Valley. As a counterpoint, liberals might point to the many Scandinavian nations that are among the wealthiest, happiest, most productive, and most equal places on earth.
Who’s right? A recent study from Shigehiro Oishi at the University of Virginia and Selin Kesebir at the London Business School takes a close look at the connection between economic growth, inequality, and happiness across 34 nations. The big takeaway: Economic growth is associated with lower levels of happiness in nations with higher income inequality.
Advanced vs. less developed nations
The study tests the connection between economic development, inequality, and happiness using two different data sets. The first data set covers happiness in 16 advanced nations like Denmark, France, and the United Kingdom using happiness data, or what researchers term “subjective well-being,” from surveys collected by the World Database of Happiness (developed by the Dutch sociologist Ruut Veenhoven). Both parts of the study use data on economic development measured as GDP per capita from the World Bank’s World Development Indicators, and on inequality based on the Gini coefficient (the standard measure of inequality) from the United Nations University World Institute for Development Economics Research.
To continue reading this article by Richard Florida, go to: www.citylab.com/politics/2015/12/income-inequality-makes-people-unhappy/416268
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