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The first World Happiness Report was published in April 2012, in support of the High Level Meeting at the United Nations on happiness and well-being, chaired by the Prime Minister of Bhutan. Since then we have come a long way. Increasingly, happiness is considered to be the proper measure of social progress and the goal of public policy. This is the fourth World Happiness Report, and it is different in several respects from its predecessors. These differences relate to timing, content and geography. The main innovation in the World Happiness Report Update 2016 is our focus on inequality. We have previously argued that happiness, as measured by life evaluations, provides a broader indicator of human welfare than do measures of income, poverty, health, education, and good government viewed separately. We now make a parallel suggestion for measuring and addressing inequality. Thus, we argue that inequality of well-being provides a better measure of the distribution of welfare than is provided by income and wealth, which have thus far held center stage when the levels and trends of inequality are being considered. First, we show that there is a wide variation among countries and regions in their inequality of well-being, and in the extent to which these inequalities changed from 2005-2011 to 2012-2015. In the world as a whole, in eight of the 10 global regions, and in more than half of the countries surveyed there was a significant increase in the inequality of happiness. By contrast, no global region, and fewer than one in 10 countries, showed significant reductions in happiness inequality over that period. Second, the chapter shows that people do care about the happiness of others, and how it is distributed. Beyond the six factors already discussed, new research suggests that people are significantly happier living in societies where there is less inequality of happiness.