Study Shows How Income Inequality Affects Whole Countries' Happiness Levels

How satisfied are you with your life?

As the gap between rich and poor becomes more obvious, addressing income inequality has become one of the most pressing issues of our time. A lot has been said about it, often on the impact of income inequality on the poor as well as socioeconomic issues. Recently published in the Harvard Business Review, a new study shows income inequality makes countries' populations less happy, even if the people surveyed were relatively well-off. 

Conducted by Jan-Emmanuel De Neve, an associate professor in economics and strategy at Saïd Business School and a fellow of Harris Manchester College at the University of Oxford, and Nattavudh Powdthavee, research fellow at the Melbourne Institute of Applied Economics and Social Research at the University of Melbourne and at Centre for Economic Performance at the London School of Economics, the study was based on data from the Gallup World Poll and the World Top Incomes Database.

Their findings show that when income is concentrated on the 1 percent, people were more likely to report being less satisfied with life and having more negative emotional experiences. But while life satisfaction seemed to be negatively affected by high income inequality, positive emotional experiences remained the same — which means how much you laugh, have fun, or feel rested doesn't change.

Negative emotional experiences, however, did rise along with the top 1 percent's increased income. 

Writing to A Plus via email, the study's co-author Powdthavee explained:

What we think is essentially happening is that, within a given size of income pie, the more money going to the elite increases the distance between the richest 1 percent and the other 99 percent, so much so that it depresses how people rate their overall satisfaction with their lives. Yet income inequality at the very top doesn't seem to have a direct impact on how people spend their daily lives, i.e. people living in a highly unequal society are not starved of pleasurable experiences compared to those living in a society where income is more equally distributed.

So the next time you consider income inequality in your society — or when you hear a presidential candidate talk about fighting for the middle class — keep in mind the implications that the issue can have on a country's overall well-being, too. 

Cover image via Lisa S. / Shutterstock