Abstract
Measurement confounding due to socioeconomic differences between world regions may bias the estimations of countries' happiness and global inequality. Potential implications of this bias have not been researched. In this study, the consequential validity of the Happy Planet Index, 2012 as an indicator of global inequality is evaluated from the Rasch measurement perspective. Differential Item Functioning by world region and bias in the estimated magnitude of inequalities were analyzed. The recalculated measure showed a good fit to Rasch model assumptions. The original index underestimated relative inequalities between world regions by 20%. DIF had no effect on relative measures but affected absolute measures by overestimating world average happiness and underestimating its variance. These findings suggest measurement confounding by unmeasured characteristics. Metric disadvantages must be adjusted to make fair comparisons. Public policy decisions based on biased estimations could have relevant negative consequences on people's health and well-being by not focusing efforts on real vulnerable populations.
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