Top incomes and human well-being: Evidence from the Gallup World Poll

Abstract

The share of income held by the top 1 percent in many countries around the world has been rising persistently over the last 30years. But we continue to know little about the relationship between the rising top income shares and human wellbeing. Using data from 24 countries and years ranging from 2005 to 2013 in the Gallup World Poll and the World Income Database, this study examines the relationship between top income share and different dimensions of subjective wellbeing. The results are mixed, with the negative relationship between top income shares and average life ladder being driven largely by the European sub-sample. For the European countries, we also document evidence that top income is statistically significantly associated with lower average enjoyment and being well-rested yesterday, and higher average stress and sadness yesterday. Overall, our findings suggest that, at least for individuals in Europe, an economic policy that increases national incomes may have significant crowding-out effect on aggregate evaluative wellbeing if it only increases the share of income at the very top of income distribution. More generally, our results highlight the complex relationships between income inequality and subjective wellbeing across different countries.