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Inequality and Happiness: Insights from Latin America

Inequality is a contentious topic in economics, and its effects on individual welfare remains an open questions. We address it from the perspective of the economics of happiness. We draw from our research on the topic, based on new empirical evidence for Latin America. We find several differences from studies conducted in the U.S. and Europe, especially regarding the role of perceptions of mobility and status. We find that inequality has negative effects on happiness in Latin America, where it seems to be a sign of persistent unfairness. Our research examines the effects of several variables, including wealth, status, and reference group size, on the link between inequality and happiness, with the presumption that these variables can help us identify the channels through which inequality operates as a signaling mechanism.

Authors: 
Carol Graham, The Brookings Institution
Andrew Felton
Publication Date: 
April, 2006
Publication Type: 
Journal: 
Journal of Economic Inequality
Volume: 
4
Issue Number: 
1
Pages: 
107-122