Does income inequality affect individual happiness? Evidence from Seoul, Korea

Positive neighborhood characteristics are important for quality of human live. However, our understanding of the effects of intangible factors on individual subjective well-being remains limited. Among other intangible neighborhood variables, income inequality should be carefully assessed by planners at the neighborhood level because leaving it unaddressed may make communities unsustainable. However, relatively little attention has been paid to the relationship between income inequality and happiness at the neighborhood level in the previous literature. In this study, we investigate how small-scale income inequality affects individual happiness, focusing on the city of Seoul, Korea. To do this, we employ an ordered-probit model using Seoul Survey Data and micro income data obtained from a private sector to measure income inequality. Our empirical analyses show that income inequality is negatively associated with individual subjective well-being. In particular, findings show that the relationship between income inequality and individual subjective well-being varies by income, education level, and age. To reduce spatial income inequality, we suggest that various place-based planning strategies, including provision of affordable housing, relaxed zoning requirements, and increased social mix, be provided.