Income inequality and wellbeing: the plight of the poor and the curse of permanent inequality

This paper examines the effect of income inequality on individual wellbeing. The results show that those in the lowest twenty percent of income distribution have a marked reduction in wellbeing compared to the remainder. Hence, poverty is detrimental to wellbeing. The second key finding of this paper is that the existence of permanent aggregate income inequality reduces the wellbeing of individuals in other parts of income distribution, irrespective of their level of income. Income inequality is bad for everyone's wellbeing. Keywords: income inequality, life satisfaction, wellbeing JEL Classification Codes. 110,131
This paper investigates the relationship between aggregate income inequality and life satisfaction, or wellbeing. Our conclusions suggest that the promotion of social wellbeing in wealthier societies may now depend more [...]