| Research on subjective well-being (SWB)---often referred to as "happiness research"---is gaining momentum in both policy circles and within the academic realm. Global SWB data are increasingly used in both micro- and macro-level economic analyses. However, there are very few cross-country studies relating well-being to income inequality at the macro level. Based on relative deprivation theory, the level of income inequality---as measured by the Estimated Household Income Inequality (EHII)---is conceptualized at the aggregate level to capture the overall scale of social stratification in a society. A regional fixed effects model using data from the World Values Survey and the University of Texas Inequality Project (UTIP-EHII) is employed to empirically test the relationship between income inequality and aggregate levels of life satisfaction in a sample of 51 countries during the period 1981--2002. OLS regression analysis shows that the model explains approximately 73 percent of the variation in reported life satisfaction for the countries in the sample and that, all else equal, people living in egalitarian societies are, on average, more satisfied with their lives. |
