Before one achieves truth, one entertains hypotheses. Before one entertains hypotheses, one explores the terrain. Before one explores the terrain, one has a hunch…because you have to start somewhere.
Hunch: inequality in itself doesn’t have much to do with well-being.
Exploration: limit data set to US states. Compare state levels of inequality and possible correlates of well-being. If there’s any pattern, it’s most likely to be apparent at the extremes of inequality, i.e., the least and most unequal state.
I’ll start with the least unequal states. Without further ado:
The “well-being composite” includes the following features:
Purpose: liking what you do each day and being motivated to achieve your goals
Social: having supportive relationships and love in your life
Financial: managing your economic life to reduce stress and increase security
Community: liking where you live, feeling safe, and having pride in your community
Physical: having good health and enough energy to get things done daily
So what do I see? It appears that states with the lowest level of inequality also have low unemployment rates (except for that huge outlier, Alaska*). They also tend to be rural, vote Republican, and do somewhat better than other states (on average) on median household income, poverty rates, and the composite measure of well-being. Of course, we don’t know cause-and-effect here.
For one thing, it’s well-documented that the largest cities are the most unequal, so it only makes sense that rural states are less unequal. It’s possible that some aspects of well-being, such as social support and community, have more to do with living in rural communities than with levels of inequality. Plus, low unemployment most likely raises other indicators of well-being, namely sense of purpose, financial security, and health (via employer-paid health insurance). Bottom line: inequality level may explain little in these states, once you control for the effects of rural living and unemployment rates.
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* Why does Alaska have such a high unemployment rate? One reason is the seasonal nature of so much work in Alaska. Seasonal work often pays well, but seasonal workers will be counted as unemployed part of the year. In addtion, a lot of Alaskans choose to hunt and fish for a living. They may not consider themselves unemployed but that’s the way they’re counted.
Links:
https://wallethub.com/edu/happiest-states/6959/
2017 state well-being rankings - Gallup-Sharecare Well-Being Index
https://www.politico.com/mapdata-2016/2016-election/results/map/president/
https://www.bls.gov/lau/lastrk17.htm
https://blog.euromonitor.com/the-worlds-largest-cities-are-the-most-unequal/
https://kingeconomicsgroup.com/4-reasons-for-alaskas-high-unemployment-rate/