Maarten Berg and Ruut Veenhoven, Erasmus University Rotterdam, Faculty of Social Sciences
In Bent Greve (ed.) 'Social Policy and Happiness in Europe', chaper 11, pp.174-194, Edgar Elgar, 2010 , Cheltenham, UK, ISBN 978 1 84844 574 1

All modern nations reduce income differences to some extent, and as a result there is an ongoing discussion about what degree of income inequality is acceptable. In this discussion libertarians oppose egalitarians and a principled consensus between these positions is not possible. Consensus can only be reached on the basis of a consequential ethic and one of these is the ‘greatest happiness principle’. In this paper the utilitarian approach is followed and the relation between income inequality and happiness in 119 nations is considered. Overall happiness is conceptualized as the‘subjective appreciation of life as a whole’ and is measured using responses to survey questions. We considered both average happiness and spread of happiness. We found little relationship between income inequality and average happiness in nations. There was no correlation with average happiness, a slightly positive correlation with average mood and a slightly negative correlation with average contentment. All these correlations became positive when wealth of the nation was controlled. Spread of happiness tended to be larger in income unequal nations, but this effect disappeared when wealth of the nation was controlled. Correlations reflect the balance of positive and negative effects; in the case of average happiness the positive effects prevailed and in the case of spread both effects balanced out. The data do not show a point where the balance shifts.

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