… and the Pursuit of Happiness - Institute of Economic Affairs

… and the pursuit of happiness
are more equal countries happier?
Figure 12 Suicide rate per 100,000 1
2
30
3
Hungary
4
25
Japan
5
Slovenia
Korea
6
20
Belgium
7
Finland
Switzerland
Austria France
8
15
Czech Rep.
Hong Kong
Sweden
New Zealand
9
Norway
Portugal
USA
Denmark Germany
Singapore
10
10
Canada
Ireland Australia
11
Netherlands Spain UK
12
5
Italy Israel
13
Greece
14
0
24 28 32 36 40 44
15
Inequality (GINI)
16
17
18
19
20
21
22
23
24
25
26
Source: Statistics from Institute for Fiscal Studies (2010)
27
28
The academic literature on happiness and inequality
29
30
Suicide rate per 100,000 (2009)
in The Spirit Level (Wilkinson and Pickett, 2009: 175): the authors
do, however, insist that a higher suicide rate is a trade-off for a
lower homicide rate, but this is not an argument that stands up
against the facts (Snowdon, 2010: 82).
Whether one compares ‘more equal’ countries with ‘less
equal’ countries, or whether one studies each country over time,
the national mood remains stubbornly indifferent to levels of
income inequality. This holds true whether one looks at happiness,
subjective wellbeing, life satisfaction or proxies for all three.
Comparing crude data between whole countries is a blunt
instrument, but more sophisticated attempts to test whether
inequality affects happiness have not produced compelling
evidence. Perhaps the most thought-provoking of these was the
study by Alesina et al. (2004), which found that happiness was
sometimes affected by inequality, but was principally dependent
on social attitudes rather than inequality per se, a conclusion
echoed by Biancotti and D’Alessio (2008), Hopkins (2008) and
Bjørnskov et al. (2010). While it might be expected that the rich
would be less troubled by inequality than the poor, this was not
necessarily the case. Alesina et al. found low-income Europeans to
be averse to inequality, while low-income Americans were ‘totally
unaffected’. Rich Americans were often more averse to inequality
than their poorer compatriots, while left-wingers were more sensitive
to changes in wealth distribution on both sides of the Atlantic.
Alesina et al. explained the paradox of American tolerance
to inequality, despite a wealth gap that dwarfs most European
countries, by reference to the prevailing belief that wealth is the
product of hard work and merit – a view that is widely shared in
Europe only by the rich. In contrast to Europeans, Americans are
inclined to view inequality as justified and wealth redistribution
as unfair. Americans have greater faith in social mobility, with the
poor expecting to move up the ladder and the rich fearing they
might move down. Alesina et al. found that 60 per cent of Europeans
believed the poor were trapped in poverty, while only 30
per cent of Americans felt the same way. When asked whether the
poor were lazy, the percentages were exactly reversed.
Regardless of whether these beliefs are grounded in reality,
the study showed that perceptions of fairness and social mobility
are more important than inequality itself. Some people are made
less happy by inequality while others rather like it. A greater
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