There is a new research ( see report by The Economist here) investigating the relationship between inequality and happiness. I attach the graph below from the website:
It seems counter intuitive as people in rather inequal countries do not always end up gloomier, at least on aggregate level.
Economic research papers about happiness and income/equality are rarely convincing, because:
1. Happiness is subjective and therefore hard to measure.
2. Various factors impact people’s happiness, among them many are cultural or limited to certain areas.
Here is an interesting paper by Easterlin which argues that aspirations grow by income and can undercut the people’s happiness brought by higher income.