Academic studies often conceive of inequality in terms of income dispersion – that is, the distribution of income within a population at a particular point of time. Income inequality is higher to the extent that high income individuals receive larger percentages of the total income of the population. It’s essential to remember, though, that who’s rich one year may not be rich the next. For example, over a third of US adults spend at least a year in the top 5% of income by the age of 60 - but less than a tenth stay there for five years or more. And roughly half the households that manage to earn at least a million only do so for a year. In other words, there’s lots of churn at the top.
There’s actually lots of churn throughout the US income distribution. People move up and down all the income ladder all the time - usually up as we approach late middle-age and then slowly down thereafter (with a big drop the last few years of life). Such robust individual social mobility* may explain (in part) the disconnect between high inequality and personal happiness, at least in developed countries with adequate support for the poor. To simplify the argument: as long as there’s hope in one’s own potential for social mobility, one doesn’t get too stressed out by high income inequality.
Here’s a definition of hope: “the perceived ability to execute envisioned routes to desirable future goals.” Hopeful people are able to envision pathways to success and feel confident in their ability to follow those pathways to achieve their goals. Socially mobile societies tend to be full of hopeful people, because they provide a foundation for hope: opportunity, personal experience, and the example of others.
Besides being a pleasant feeling in itself, hope is associated with goal achievement, which provides further grounds for hope. For example, hopefulness predicts academic achievement, which predicts social mobility (Dixson et al, 2018). This description of high-hope individuals provides a clue as to why hope leads to so many good things:
“In general, high-hope individuals are energetic, view obstacles as challenges, generate contingency plans, gather support when needed, experience less stress and anxiety, have many ideas for their future, are excited about their future, and perceive a high likelihood of success in their endeavors.” - Dante D. Dixson, Dacher Keltner, Frank C. Worrell & Zena Mello (2018) The magic of hope: Hope mediates the relationship between socioeconomic status and academic achievement
Basically, hopeful people are more likely to engage in productive behaviors and those behaviors lead to the good things. Here’s some additional support for my argument:
“Does societal income inequality harm individuals' quality of life, their subjective well-being? No. In developing nations inequality increases well-being by 8 points out of 100. In advanced nations it has no effect.” - Kelley, J. & Evans, M. (2017). Societal inequality and individual subjective well-being: Results from 68 societies and over 200,000 individuals, 1981-2008.
“When inequality loses its association with hope and instead becomes interpreted as a signal of a rigged society, higher inequality relates to lower well-being.“ - Buttrick, N. R., S. J. Heintzelman, et al. (2017). Inequality and well-being.
“...greater inequality was associated with higher life satisfaction in rural China but not significantly associated with life satisfaction in urban China. The positive inequality–happiness link in rural areas was mediated by hope.” - Cheung, F. (2015). "Can Income Inequality be Associated with Positive Outcomes? Hope Mediates the Positive Inequality–Happiness Link in Rural China.
This is all food for thought. A few additional morsels:
Inequality has no direct relationship with happiness.
Inequality without hope is the problem.
What creates hope? The sense that there is something I can do to improve my situation.
What can governments do to increase society-wide hopefulness?
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* Individual social mobility refers to a person’s income trajectory over a lifetime, in contrast to intergenerational social mobility, which is the extent to which children do better than their parents.
References:
Carroll, Robert “Income Mobility and the Persistence of Millionaires, 1999 to 2007” Special Report No. 180. June 21, 2010
Buttrick, N. R., S. J. Heintzelman, et al. (2017). "Inequality and well-being." Current Opinion in Psychology 18: 15-20. https://doi.org/10.1016/j.copsyc.2017.07.016
Cheung, F. (2015). "Can Income Inequality be Associated with Positive Outcomes? Hope Mediates the Positive Inequality–Happiness Link in Rural China." Social Psychological and Personality Science 7(4): 320-330. http://journals.sagepub.com/doi/abs/10.1177/1948550615619762
Dante D. Dixson, Dacher Keltner, Frank C. Worrell & Zena Mello (2018) The magic of hope: Hope mediates the relationship between socioeconomic status and academic achievement, The Journal of Educational Research, 111:4, 507-515, https://doi.org/10.1080/00220671.2017.1302915
Hirschl TA, Rank MR (2015) The Life Course Dynamics of Affluence. PLOS ONE 10(1): e0116370. https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0116370
Kelley, J. & Evans, M. (2017). Societal inequality and individual subjective well-being: Results from 68 societies and over 200,000 individuals, 1981-2008. Social Science Research, 62, 1-23. https://doi.org/10.1016/j.ssresearch.2016.04.020