Revised DRAFT

The effect of inequality on individual welfare remains a debated question. In Europe and the U.S., inequality seems to signal mobility and opportunity as much as it suggests injustice. We explore its effects in Latin America. We find that inequality has significant effects on well being, making those in the highest quintiles 5 % happier than the average and those in the poorest quintile 3 % less happy. Our analysis of perceptions of inequality, rank, and opportunity suggests that differences in these realms are at least as important to well being as income inequality. In Latin America, inequality seems to be a signal of persistent advantage for the wealthy and disadvantage for the poor, rather than of future opportunities