Can Income Inequality be Associated With Positive Outcomes? Hope Mediates the Positive Inequality-Happiness Link in Rural China

Prior studies on the inequality-happiness link have yielded mixed results and tend to focus on mechanisms that explain the negative effects of inequality. The current study investigated the inequality-happiness link in China and examined hope as a mechanism that explains positive effects of income inequality. Using data from a large sample of 30,255 Chinese respondents, 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. By providing evidence for a mechanism through which income inequality can lead to greater well-being, the current study sheds light on the heterogeneity of prior findings on the inequality-happiness link. These results supported a dual-process model of income inequality in which inequality leads to higher or lower subjective well-being through hope and social comparison depending on stages of economic development.