**The [income paradox](https://www.usnews.com/news/best-countries/articles/2018-01-23/economic-inequality-and-happiness) demonstrates that up to a certain point, an increase in the overall wealth of a nation does not lead to an increase in happiness. However, a reduction in income disparity does.** • Studies have shown that there is generally a [positive correlation](https://www.usnews.com/news/best-countries/articles/2018-01-23/economic-inequality-and-happiness) between wealth and happiness. This is particularly strong in cases where the overall population tends to be living in absolute poverty. • However, [research](https://news.gallup.com/reports/220601/what-happiness-today-tells-us-about-the-world-tomorrow.aspx) has suggested that after some time, an increase in wealth does not lead to an increase in satisfaction for the individual. For example, in the past decade, the UK’s GDP had been steadily increasing, in contrast to happiness levels which decreased by 15%. • This trend can be attributed to [two factors](https://www.bloomberg.com/news/articles/2015-12-21/the-relationship-between-happiness-income-inequality-and-economic-growth). Firstly, people in more developed countries tend to base their happiness on their situation relative to other people, and so the bigger the inequality, the more unhappy they will feel. A second possible reason is that the growth of the economy is only experienced by the rich, and so the poorer portion of the population do not become any more satisfied with their situation. For example, the Scandinavian countries which are well-known for promoting income equality, regularly sit at the top of the [World Happiness Report](https://worldpopulationreview.com/country-rankings/happiest-countries-in-the-world). The US, on the other hand, boasts the highest GDP in the world and yet sits at number 18 on the index in 2021. Notedly, the nation is often acknowledged to have one of the [highest income disparities] (https://inequality.org/facts/wealth-inequality/) in the developed world. • In light of this, it can be argued that income equality leads to a happier society overall.

*Some* wealth/income disparity is good, and drives society forward. *Extreme* wealth/income disparity is bad, and stimulates crime and violence.