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The Anna Karenina income effect: Well-being inequality decreases with income
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The Anna Karenina income effect: Well-being inequality decreases with income

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  • Klein Teeselink, Bouke
  • Zauberman, Gal

Abstract

Prior research finds that income is positively related to well-being. While this finding is important, we argue that it hides systematic variability within income groups and, importantly, the relative prevalence of extreme unhappiness (misery) and extreme happiness (bliss) across income groups. Using Gallup data from over two million US survey respondents, we find that well-being inequality decreases markedly with income, where rich people are more similar in their well-being than poor people. We further find that both the level-enhancing effect and the variance-reducing effect of income are primarily the result of a declining misery along the income distribution, whereas the share of bliss remains relatively constant. These results are explained by a combination of heterogeneous health and unemployment effects along the income distribution, and some social status concerns.

Suggested Citation

  • Klein Teeselink, Bouke & Zauberman, Gal, 2023. "The Anna Karenina income effect: Well-being inequality decreases with income," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 501-513.
    • Handle: RePEc:eee:jeborg:v:212:y:2023:i:c:p:501-513
    DOI: 10.1016/j.jebo.2023.05.036
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    More about this item

    Keywords

    Well-being; Well-being inequality; Income; Recentered influence function regression;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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