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

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

London Business School research tries to explains the “Easterlin Paradox.”

A narrow focus on GDP is leading to myopic economic policy, a London Business School expert warns. New research finds an increase in wealth does not make a country happier if it comes with increased inequality.

New research by Selin Kesebir, Assistant Professor of Organisational Behaviour, London Business School, andShigehiro Oishi, Professor of Psychology, University of Virginia, finds that a country's economic growth only makes its citizens happier if the gains are evenly spread.

Dr Kesebir explains: "Our research provides an explanation for one of the most puzzling findings in the social sciences over the past half century: an increase in wealth not always increases happiness. This is the famous Easterlin paradox.

"We find that an increase in GDP only makes us happier if wealth is evenly distributed. Countries with growing income inequality often fail to increase average happiness, even if they succeed in boosting GDP. We know that happier people are also more productive, so this really matters. Even wealth distribution should create a virtuous cycle -- more happy people, more productively contributing to the country's economic growth."

The findings come at a time when income inequality is growing globally. A recent Oxfam report ('An Economy for The 1%') shows that the world's wealth is becoming ever more concentrated, with 62 billionaires now holding as much wealth as the world's poorest 3.5 billion.

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