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Economia Politica

, Volume 36, Issue 2, pp 473–508 | Cite as

Happiness and inequality in European countries: is it a matter of peer group comparisons?

  • Adalgiso Amendola
  • Roberto Dell’Anno
  • Lavinia ParisiEmail author
Article

Abstract

This paper uses peer comparisons to analyze the impact of different types of inequalities (i.e., within-group, between-group and overall inequality) and reference income on subjective happiness. This study contributes to an emergent strand of research in which both relative levels of economic resources and the income distribution are regarded as determinants of individual happiness. The empirical findings show that overall and within-group inequality negatively affect individual happiness, inequality between reference groups does not affect happiness, and a higher average income of the reference group increases individual happiness. We examine whether people’s aversion to inequality is conditional on their income position within reference group and institutional differences across European countries. These tests indicate that an increase in inequality or a decrease in average income decreases the happiness of both the rich and the poor. Regarding the differences across countries, people who live in more mobile societies with better welfare systems (e.g. Social-Democratic countries) are less adversely affected by inequality than people living in countries with low social mobility and ineffective systems of social protection (e.g. the Mediterranean countries). The analysis is based on data from the European Quality of Life Survey.

Keywords

Happiness Inequality Reference groups Social comparison theory Subjective well-being 

JEL Classification

D63 I31 I32 

Notes

Acknowledgements

We would like to thank anonymous reviewers for providing insightful comments and suggestions. Any remaining errors or inaccuracies are, of course, our own.

Supplementary material

40888_2018_130_MOESM1_ESM.docx (197 kb)
Supplementary material 1 (DOCX 198 kb)

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Copyright information

© Springer Nature Switzerland AG 2018

Authors and Affiliations

  1. 1.Department of Economics and Statistics, CELPEUniversity of SalernoFisciano (SA)Italy

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