Income Equity and Subjective Well-Being – With Distinctive Reference to the COVID-19 Pandemic: a review

Proceedings of The 5th International Conference on Business, Management and Economics

Year: 2021

DOI:

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Income Equity and Subjective Well-Being – With Distinctive Reference to the COVID-19 Pandemic: a review

S.P. Sree Harini, Rosy Merlin Irudayaraj

ABSTRACT: 

Income inequality has increased more in the Nordic countries than in most OECD countries since the early 1990’s although the starting point was exceptionally low with inequality remaining well below the OECD average according to the NEPR 2018. Capital incomes have emerged as a rather prominent factor contributing to rising inequality as two-thirds of dividends go to the top one per-cent, weakening redistribution and contributing to the trend. Despite this, in the World Happiness Report 2020, the Nordic countries constantly rank among the happiest in the world. The Easterlin Paradox which illustrates the anomalous relationship between the economic growth and the level of personal happiness introduces the idea of income inequality being negatively correlated with average life satisfaction as an economy grows, refuting the popular prior that growth in material wealth leads to greater subjective well-being, this effect however completely disappears when controlled for GDP per capita in these countries.

This article utilizes social-psychological and self-reported measures of happiness to analyze the relationship between income inequality and well-being and examines the relative utility hypothesis to understand the influence of relative income positions on average life satisfaction. The study suggests disparate correlations between income and happiness, and puts forth explanations on changes in emotions such as altruism, envy, benevolence and trust and includes quantitative representations exploring equality measures not achieving the desired impact on well-being indicators. There is an attempt to analyze the impact of COVID-19 and its responsiveness to related subjective variables that supports measurement of happiness.

Keywords: Behavioral; Easterlin; Development; Happiness; Psychology.