What is the effect of income inequality on happiness?

In this bachelor thesis, the relationship between income inequality and self-reported life satisfaction will be discovered. Using individual happiness data from the World Values Survey and data on income inequality (Gini index) at the country level, an OLS regression with both country and year fixed effects is employed to test this relationship in a sample of 43 countries around the world during the period 1981-2014. Regressions are also run by region to discover any differences between these regions. The results show that at the aggregate level, there is no significant relationship between income inequality and life satisfaction. For Asia and Latin America, the effect of income inequality on happiness is significantly negative. For Africa, the effect of income inequality on happiness is significantly positive.