The Welfare Costs of Well-being Inequality

Produced by: 
National Bureau of Economic Research
Available from: 
January 2016
Paper author(s): 
Leonard Goff
John F. Helliwell
Guy Mayraz
Topic: 
Poverty - Inequality - Aid Effectiveness
Year: 
2016

If welfare is measured using satisfaction with life (SWL), its variance is a natural measure of inequality that incorporates all the determinants of well-being with the same weights that determine welfare itself. In this paper we explore this possibility empirically in three different ways. First we show that inequality of subjective well-being has a negative effect on life satisfaction considerably greater than does income inequality. Second, we show that this comparative result is stronger for those who report themselves as valuing equality. Finally we show that social trust, which has been shown to support subjective well-being both directly and indirectly, is more fully explained by well-being inequality than by income inequality. 

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