Inequality, Happiness and Relative Concerns: What Actually is their Relationship?

Research output: Working paperDiscussion paper

Abstract / Description of output

This paper briefly and informally surveys different theoretical models of relative concerns and their relation to inequality. Models of inequity aversion in common use in experimental economics imply a negative relation between inequality and happiness. In contrast, empirical studies on happiness typically employ models of relative concerns that assume that increases in othersâ?? income always have a negative effect on own happiness. However, in these latter models, the relation between inequality and happiness can be positive. One possible solution is a rivalry model where a distinction is made between endowment and reward inequality which have respectively a negative and positive effect on happiness. These different models and their contrasting results may clarify why the empirical relationship between inequality and happiness has been difficult to establish.

Original languageEnglish
PublisherUCLA Department of Economics
Number of pages25
Publication statusPublished - Jan 2008

Publication series

NameLevine's Bibliography

Keywords / Materials (for Non-textual outputs)

  • inequality
  • relative position
  • social preferences
  • tournaments
  • evolution


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