Kuznets curve in happiness: A cross-country exploration

- This is the first study to model happiness-inequality through a Kuznets-quadratic.
- Three large cross-country data sets are used and several models are explored.
- There is an indication of a Kuznets-type inverted-U relation in all cases.
- There may be need to address happiness-inequality during early increases in happiness.

In the context of the recent emergence of enormous research and policy interest in the many dimensions of happiness, this paper explores for the first time a Kuznets-type relation between average happiness and happiness-inequality in a large cross-country setting. Three different data sets and several types of specifications are used. The study suggests three main points. First, in all cases there is a clear indication of an inverted-U relation in which happiness-inequality first increases with mean happiness, reaches a peak, and then declines. Moreover, the estimated turning-point occurs at a fairly "late" stage, and 35% to 40% of the countries lie in the increasing-inequality segment. Second, a possible policy implication is that there may be need to address accentuation of happiness-inequality at early stages of increase in average happiness. Third, the estimates indicate that the predominant sentiment in the literature toward a negative relation between mean happiness and happiness-inequality is probably based on oversimplified linear models.