The cost of happiness: income inequality and wellbeing

The answer to an age-old question may be just around the corner with a University of Melbourne academic is seeking to discover whether money really can buy happiness.

Work, income, spending and wellbeing in Australia: A multi-level, longitudinal analysis of individuals and households

The answer to an age-old question may be just around the corner with a University of Melbourne academic seeking to discover whether money really can buy happiness.

While much research has been already dedicated to the impact of income on wellbeing, Associate Professor Michael Zyphur, an Australian Research Council Future Fellow, wants to fill the gaps in existing knowledge, including:

  • determining the work people do to generate income,
  • how they use income,
  • the effects on their physical and social wellbeing,
  • the effects at the household level, and
  • the causal effects at multiple levels.

As part of this project, Prof Zyphur is determining how exactly to bridge the ever-widening gap between rich and poor.

With income inequality proven to have a negative impact on health and wellbeing, he is working to establish not only the best way to address inequality, and also by how much in order to maximise subjective wellbeing.

Subjective wellbeing refers to how people experience the quality of their lives and includes emotional reactions and cognitive judgments.

Using a globally representative sample of 117 nations from 2005-12, the project studies the independent, nonlinear effects of 'market inequality' versus 'net inequality', meaning the inequality that exists before and after redistributive taxes and transfers such as public healthcare, transportation and education.

Findings so far show that net inequality is negatively associated with subjective wellbeing while market inequality, which can be reduced through high minimum wages, support for labor unions and progressive tax systems, has more positive associations.


This study seeks to enhance the wellbeing of the Australian community by examining the trade-offs between work, income, spending, and physical, psychological, and social wellbeing, leading to more informed decision making by governments and individuals.

His study of income inequality will offer a more nuanced understanding of the relationship between income inequality and subjective wellbeing, with important implications for policy and future research when it comes to addressing inequality issues.

Chief investigator

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