Is an economically unequal society preferable to a more equal one? Some would say that the ultimate test is subjective. Do people in general feel better or worse, happier or unhappier? At one level, this is a complex question of morality and motivation that raises deeper questions about the purpose of life. At another level it is a purely empirical question about what people say when they are asked.

A number of recent social surveys reveal that increasing economic growth, incomes and wealth have not produced a significantly happier society. Summarising the evidence, Richard Layard, a leading economist in the field of happiness research, states that ‘People in the West have got no happier in the last 50 years. They have become richer … they have longer holidays, they travel more, they live longer, and they are healthier. But they are no happier’ (Layard 2003a: 14). The character, causes and consequences of this phenomenon have been extensively probed in the Australian context by Clive Hamilton and other researchers at The Australia Institute in Canberra (Hamilton 2002, 2003c; Hamilton and Denniss 2005; Hamilton and Rush 2006). While some of those concerns go beyond the central theme of this book, the linking question is whether the evident disappointment with material economic progress results from inequality in the distribution of the additional incomes.

Exploring this issue involves a series of sequential steps.