Evaluating the Effect of Absolute and Relative Poverty on Happiness Inequality in Iran

This research, based on Bentham's philosophy of pleasure and suffering, has assumed the pleasure as happiness and suffering as poverty and it is following the evaluation of the suffering caused by poverty on pleasure of happiness equality. Absolute and relative poverty can lead to happiness inequality as moving the line of poverty to the higher deciles of income will lead to more happiness gap in the deciles. In this way, this research, by using Markov Switching method, has evaluated the effect of absolute poverty on happiness inequality during the period 1985-2012 and also has evaluated the effect of relative poverty on happiness inequality during the period 1979-2012 in Iran’s economy. The results from estimated research models showed that absolute and relative poverty have a significant positive impact on happiness inequality in Iran’s society.