Regional income inequality and happiness: Evidence from Japan

We investigated how regional income inequality is associated with the individual assessment of happiness based on micro data from nationwide surveys in Japan. Our multilevel analysis using logit and ordered logit models confirmed that individuals who live in areas of high inequality tend to report themselves as less happy, even after controlling for various individual and regional factors. Notably, the fact that happiness depends on not only income but also income inequality indicates the importance of income redistribution for individual well-being. We also find that the association between regional inequality and happiness is not uniform across the different levels of perceived happiness. Moreover, the sensitivities of happiness to regional inequality differ substantially by key individual attributes such as gender, marital status, level of education, occupational status, and political views. Among others, an important finding for social policy is that those of unstable occupational status and those with a lower level of education are more sensitive to regional inequality. Given the fact that these people tend to be less happy than the others, this result points to the risk that regional inequality additionally reduces the well-being of those under unfavorable socioeconomic conditions