Income Inequality Leads to Less Happy People

Fiscal conservatives might tell you that inequality is an inevitable and salutary side effect of the free enterprise system. In the U.S., after all, income inequality tends to be the most pronounced in highly innovative economies such as New York or the Silicon Valley. As a counterpoint, liberals might point to the many Scandinavian nations that are among the wealthiest, happiest, most productive, and most equal places on earth.

Who’s right? A recent study from Shigehiro Oishi at the University of Virginia and Selin Kesebir at the London Business School takes a close look at the connection between economic growth, inequality, and happiness across 34 nations. The big takeaway: Economic growth is associated with lower levels of happiness in nations with higher income inequality.