Most talk of income inequality focuses on the problems of the very poor or the broader socioeconomic implications of rising inequality. What is less well-known is that income inequality makes us all less happy with our lives, even if we’re relatively well-off.
We examined data from the Gallup World Poll and the World Top Incomes Database and found that the more income is concentrated in the hands of a few, the more likely individuals are to report lower levels of life satisfaction and more negative daily emotional experiences. That is, the higher the share of national income that is held by the top 1%, the lower the overall well-being of the general population. Specifically, we found that a 1% increase in the share of taxable income held by the top 1% hurts life satisfaction as much as a 1.4% increase in the country-level unemployment rate.