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Does wealth make us happier only if it’s shared?

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"When wealth is concentrated among a small group it evokes a sense of unfairness among the rest of society,"Dr Kesebir says.

"When growing wealth is more evenly distributed across income brackets, we often observe an increase in life satisfaction," explains Dr Kesebir. "For example, in Scandinavia, where income inequality is low, happiness increases with increasing GDP. Finland has the strongest correlation between an increase in GDP and average happiness. In many developing Latin American countries however, where wealth is still very much concentrated among a small portion of elites, increasing wealth does not come with more happiness, and happiness levels sometimes even go down as the economy grows."

Dr Kesebir and Professor Oishi examined the relationship between GDP per capita and happiness in two different data sets covering 34 nations in total. These sets consisted of 16 developed nations and 18 developing Latin American nations.

The researchers found that economic growth had a less positive and more negative effect on happiness as income inequality increased. The study has important implications for economic policy in both developed and emerging nations.

"To achieve an increase in national happiness, countries must recognize that producing more wealth alone is not sufficient. Countries with a greater gap between rich and poor need to consider that growing economic wealth may not create a happier citizenry."

The implications are particularly relevant in the current climate. The US for one is seeing widening income inequality and happiness has stagnated since the 70s. But the US is not alone and others will follow if they fail to re-frame the economic policy debate.

 

 

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