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Inequality and Happiness: Are Europeans and Americans Different?

Inequality and Happiness: Are Europeans and Americans Different?. Alberto Alesina (Harvard), Rafael Di Tella (Harvard), and Robert MacCulloch (London School of Economics) National Bureau of Economic Research, April 2001 By: Michelle Rava . Research Topics.

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Inequality and Happiness: Are Europeans and Americans Different?

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  1. Inequality and Happiness: Are Europeans and Americans Different? Alberto Alesina (Harvard), Rafael Di Tella (Harvard), and Robert MacCulloch (London School of Economics) National Bureau of Economic Research, April 2001 By: Michelle Rava

  2. Research Topics • The study is a crossroads of the study of determinates of happiness and of preferences for redistribution of wealth. • Rich/Poor • Left/Right • Does one group innately prefer more equal societies? • What role does social mobility play in the effect of inequality on happiness? • It would make sense for the poor to favor redistribution more strongly than the rich; however, “the poor of today may become the rich of tomorrow and they may not want to be in the future the ones who will support redistributive schemes.”

  3. Methods • United States • Happiness • United States General Social Survey (1972-1994) • Taken all together, how would you say things are these days-would you say you are very happy, pretty happy, or not too happy? • Preference for Redistribution • Gini coefficients of gross family income for each state from the US Census Bureau • Europe • Happiness • The Euro-Barometer Survey Series (1975-1992) • Taking all things together, how would you say things are these days-would you say you’re very happy, fairly happy, or not too happy these days? • On the whole are you very satisfied, fairly satisfied, not very satisfied or not at all satisfied with the life you lead? • Preference for Redistribution • Gini coefficients from the Deininger and Squire 1996 data set

  4. Empirical Analysis • Happygist is the answer given by an individual who lives in a certain state and year. g=whole sample, and can also be divided on the basis of other variables being studied. • MACROst refers to a set of variables at the state level that have previously been found to affect individual happiness • MICROgst refers to a set of personal characteristics that impact individual happiness • Others are dummy variables for year, error term and cross sectional units

  5. United States • Money does bring happiness • Education brings happiness • Right wing respondents were unaffected by inequality, while left leaning respondents show an inverse effect between happiness and inequality • The happiness of the poor seems unaffected by inequality; yet, the rich show a small effect of increased unhappiness • “…if there is an overall small effect of inequality in the US it comes from the leftist and rich voters.”

  6. Europe • The left shows a strong aversion to inequality, while data for the right was insignificant. • While the happiness of the poor is strongly affected by inequality, the rich are not affected.

  7. Data Comparison

  8. Conclusions • There is a significant negative effect of inequality on happiness in Europe but not in the US • Leftist and poor Europeans exhibit a strong aversion to inequality; however, none of the political or socioeconomic groups examined in the US displayed an an aversion. • There are more opportunities for social mobility in the US than in Europe.

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