How Does Economic Inequality Affect Happiness

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1. Introduction The happiness of an individual highly depends on his financial prosperity and therefore on the economic welfare of the country he lives in consequently raising the income of everybody would also raise the happiness of everybody. The intuition would say ’yes’ but this however is not the reality. One’s own welfare often depends on the welfare of others because people always compare themselves with their social environment (Easterlin, 1994). Life satisfaction originates through a “good life“ but if the level of well-being of the others also increases, one feels equal or even less satisfied (Frey, 2008). Increasing everybody’s income would not increase everybody’s happiness and the welfare of the country does not always have a…show more content…
An extreme example of economic inequality affecting citizens would be total poverty of a country. This would make a happy and satisfied life impossible just through the poorness and hopelessness that is given through the environment. Moreover a political system like communism, which also influences the economy of a country, has a remarkable impact on the people. Imagine the people who lived in East Germany and were not able to buy blue jeans because the system did not allowed imports from foreign countries. In this case referring to Maslow’s Hierarchy of Needs, the need self-actualization cannot be satisfied. This shows that the form of the economy and the equality in the economy can change life satisfaction of people as…show more content…
Indeed there are several other factors that can influence the happiness of an individual. These factors are health and environmental qualities and explicit life expectancy. Furthermore there is individual age, level of emissions and crime. Researches show that the level of emissions concerns especially young people and the crime rate is also determining for one’s welfare. Additionally to this come the personal income and also the GDP growth of a country (Di Tella, 2007). If we summarize this, we talk about Gross National Happiness (GNH). A term first introduced by the King of Bhutan in the late 1980s. His intention was to not just look at the economic part of his country, but also include other terms because economics is about individual happiness (Frey, 2008). GNH is an indicator that can measure human well-being. To find out concrete data it is necessary to make surveys, visible in Figures 1 and 2. The term GNH became more important than the Gross Domestic Product (GDP) because it focuses on the terms that can measure happiness. Gross National Happiness always had the disadvantage that it has a high variance. The collected data always depends on the responses from the people and these responses can vary in value because they depend on the mood of the person. However, it never the less can give expressive and meaningful

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