Inequality and Happiness--student

Inequality and Happiness--student - Conclusion • Is it a...

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Inequality and Happiness: Are Europeans and Americans Different? By: Alberto Alesina, Rafael Di Tella, and Robert MacCulloch
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Are Europeans & Americans Different with Respect to Inequality? The answer is apparently “yes” – Findings suggest that there is a large, negative and significant effect of (income) inequality on happiness within European societies but not in the US. – Possible Hypothesis: Europeans prefer more equal societies – Alternative Hypothesis: Due to higher or perceived higher social mobility in United States, inequality has minimal effect on happiness
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Happiness in the US
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Happiness in Europe
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Equation for the Happiness Regression Model Macroeconomic variables : GDP per capita Inflation rate Income inequality (Gini) Unemployment rate Microeconomic Variables : Age Employment status Marital status Partisan affiliation Income quartiles Dummy variable for cross- sectional units (state/country) Dummy variable for each year Error term
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US: Left vs. Right
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Europe: Left vs. Right
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US vs. Europe
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Unformatted text preview: Conclusion • Is it a “Preference for Equality” or the “Level of Social Mobility” that affects how inequality is perceived? • Conclusion: Perceived Level of Social Mobility • Why: The poor in Europe are strongly affected because they believe they are “stuck” while the poor in the US believe in their ability to change their circumstances. Conclusion • In Europe, the indifference to inequality by the rich can be explained by their security in their position – (Perceived low social mobility is good for the rich) • In the US, it is believed that higher social mobility can drastically affect affluence in a short amount of time. – (Perceived high social mobility is bad for the rich.) • Why? – In a society perceived to have less mobility like Europe, a high degree of inequality is more “informative” about future individual fate – Whereas the current position in a (perceived) more mobile society is less informative...
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This note was uploaded on 04/05/2011 for the course ECO 365 taught by Professor Giederman during the Winter '11 term at Grand Valley State.

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Inequality and Happiness--student - Conclusion • Is it a...

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