1. Inequality and Happiness: Are Europeans and Americans Different? Alberto Alesina (Harvard), Rafael Di Tella (Harvard), and Robert MacCulloch (London School of Economics) National Bureau of Economic Research, April 2001 By: Michelle Rava

2. Research Topics The study is a crossroads of the study of determinates of happiness and of preferences for redistribution of wealth. Rich/Poor Left/Right Does one group innately prefer more equal societies? What role does social mobility play in the effect of inequality on happiness? It would make sense for the poor to favor redistribution more strongly than the rich; however, “the poor of today may become the rich of tomorrow and they may not want to be in the future the ones who will support redistributive schemes.”

3. Methods United States Happiness United States General Social Survey (1972-1994) Taken all together, how would you say things are these days-would you say you are very happy, pretty happy, or not too happy? Preference for Redistribution Gini coefficients of gross family income for each state from the US Census Bureau Europe Happiness The Euro-Barometer Survey Series (1975-1992) Taking all things together, how would you say things are these days-would you say you’re very happy, fairly happy, or not too happy these days? On the whole are you very satisfied, fairly satisfied, not very satisfied or not at all satisfied with the life you lead? Preference for Redistribution Gini coefficients from the Deininger and Squire 1996 data set

4. Empirical Analysis Happy g ist is the answer given by an individual who lives in a certain state and year. g=whole sample, and can also be divided on the basis of other variables being studied. MACRO st refers to a set of variables at the state level that have previously been found to affect individual happiness MICRO g st refers to a set of personal characteristics that impact individual happiness Others are dummy variables for year, error term and cross sectional units

5. United States Money does bring happiness Education brings happiness Right wing respondents were unaffected by inequality, while left leaning respondents show an inverse effect between happiness and inequality The happiness of the poor seems unaffected by inequality; yet, the rich show a small effect of increased unhappiness “…if there is an overall small effect of inequality in the US it comes from the leftist and rich voters.”

6. Europe The left shows a strong aversion to inequality, while data for the right was insignificant. While the happiness of the poor is strongly affected by inequality, the rich are not affected.

7. Data Comparison

8. Conclusions There is a significant negative effect of inequality on happiness in Europe but not in the US Leftist and poor Europeans exhibit a strong aversion to inequality; however, none of the political or socioeconomic groups examined in the US displayed an an aversion. There are more opportunities for social mobility in the US than in Europe.