Income Inequality and its Consequences for Life Satisfaction: What Role do Social Cognitions Play?

While it is generally agreed that income inequality affects an individual’s well-being, researchers disagree on whether people living in areas of high income disparity report more or less happiness than those in more equal environments, thereby indicating the need to study how and why income inequality matters to the individual’s well-being. Findings on group-specific reaction patterns to income inequality further fuel this need. Alesina et al. (2004) argue that a preference for inequality and the perception of the possibility of social mobility account for the indistinct relationship between income inequality and subjective well-being. Combining this hypothesis with previous research on social cognition and drawing on social justice theory, this paper aims to demonstrate the mediating nature of perceptions of income inequality. It argues that the perceived legitimacy of distributive outcomes and procedures contributes to how income inequalities affect individuals and their sense of well-being. The empirical analysis is based on data from the International Social Justice Project, developed from face-to-face interviews with a representative sample of the German population. Using structural equation modeling, the paper finds structural biases in the perception of income inequality. The paper concludes that subjective well-being is a product of the individual’s perception and legitimating processes. The results indicate that social cognition is a useful tool for studies of income inequality and subjective well-being.     

Predicting the Trend of Well-Being in Germany: How Much Do Comparisons, Adaptation and Sociability Matter?

Using longitudinal data from the German Socio-Economic Panel, we estimate the variation of subjective well-being experienced by Germans over the last two decades testing the role of some of the major correlates of people’s well-being. Our results suggest that the variation of Germans’ well-being between 1996 and 2007 is well predicted by changes over time of income, demographics and social capital. The increase in social capital predicts the largest positive change in subjective well-being. Income growth, also predicts a substantial change in subjective well-being, but it is compensated for about three fourths by the joint negative predictions due to income comparison and income adaptation. Finally, we find that aging of the population predicts the largest negative change in subjective well-being. This result appears to hinge on the large loss of satisfaction experienced by individuals in old age.     

Who are Your Joneses? Socio-Specific Income Inequality and Trust

Trust is a good approach to explain the functioning of markets, institutions or society as a whole. It is a key element in almost every commercial transaction over time and might be one of the main explanations of economic success and development. Trust diminishes the more we perceive others to have economically different living realities. In most of the relevant contributions, scholars have taken a macro perspective on the inequality-trust linkage, with an aggregation of both trust and inequality on a country level. However, patterns of within-country inequality and possibly influential determinants, such as perception and socioeconomic reference, remained undetected. This paper offers the opportunity to look at the interplay between inequality and trust at a more refined level. A measure of (generalized) trust emerges from ESS 5 survey which asks “...generally speaking, would you say that most people can be trusted, or that you can’t be too careful in dealing with people?”. With the use of 2009 EU-SILC data, measurements of income inequality are developed for age-specific groups of society in 22 countries. A sizable variation in inequality measures can be noticed. Even in low inequality countries, like Sweden, income imbalances within certain age groups have the potential to undermine social trust.     

Which Inequality Makes People Dissatisfied with Their Lives? Evidence of the Link Between Life Satisfaction and Inequalities

This paper aims at establishing a clear link between different types of inequality and life satisfaction in Europe. We analyse the relationship between life satisfaction and both income inequality and inequality of opportunity using seven waves of the European Social Survey. The results show that in Europe both income inequality and inequality of opportunity reduce people’s life satisfaction. Our main results suggest that all socio-economic groups are dissatisfied with income inequality, whereas primarily low socio-economic individuals worry about inequality of opportunity. We find that expected mobility is very important in explaining the link between inequality and life satisfaction for all socio-economic groups in Europe. We advance the hypothesis that life satisfaction is conditioned by a mix of normative arguments against inequality and by the fear/possibility to lose/gain a good social position. This result complements findings on the mediating role of social mobility in the relationship with subjective well-being.     

Reference Groups and Pensioners’ Subjective Economic Well-Being in Europe

This study contributes to the interdisciplinary debate over the effects of absolute and relative income on subjective well-being by introducing country-level measures of income into the analysis of pensioners’ economic well-being. Both the relevance of alternative reference groups for different phases of old age, measured through median incomes, and the effect of general income inequality within countries are explored. Analyses are based on the cross-sectional components of the survey European Union Statistics on Income and Living Conditions from 2005 to 2011, containing information on 458,769 pensioners from 31 European countries. With the multilevel linear regression analysis method, the effects of different income measures are analyzed both at the individual and country levels. The main result shows that the average income level of pensioners within countries hold spillover effects strong enough to conclude other pensioners constitute a relevant reference point. Pensioners’ high income level decreases individual income adequacy regardless of age. Results also indicated the labour market group having varying effects on different age groups. The general income inequality does not affect pensioners’ subjective economic well-being.     

A New Dataset on Horizontal Structural Ethnic Inequalities in Thailand in Order to Address Sustainable Development Goal 10

The study accounts for the presence of endogeneity in the interdependence between social and institutional trust. Using Greece as a case study we provide valuable insights regarding the bidirectional nature of this relationship and its sign. Consequently, more accurate results might be provided regarding the determinants of both types of trust and the way in which these may be discerned in a given society. We use microdata extracted from the European Values Surveys (2002–2010) and instrumental variables techniques. Social trust is constructed as a three-item scale variable comprising generalized trust, fairness and helpfulness. The institutional trust variable is constructed as the sum of seven variables referring to trust in political institutions, civil security institutions and, supranational political institutions. In line with the hypothesis formed here, the results indicate the presence of endogeneity in the social and institutional trust interrelationship. When accounted for, this endogeneity entails different results as regards the sign of the effect that institutional trust exerts upon social trust, which turns from positive to negative. The study contributes to the limited empirical knowledge regarding the micro level two-way causal relationship between social trust and institutional trust. The study’s findings provides us with a more informative and accurate picture of the underlying dynamics of building trust in a society. Important research and policy level issues draw from these findings.

     

Economic Theory and Subjective Well-being: Mexico

Several studies have been conducted on the topic of well-being. Most of them, however, have been done in industrialized countries where income is distributed relatively more equitatively and the population tends to be more homogeneous. This paper studies the relationship between subjective and economic well-being in Mexico, a country where the economic differences among the population are more clearly marked.

According to the economic definition of well-being, higher levels of income are associated with higher levels of well-being through greater levels of material consumption. Taking into consideration this definition, it is worth asking just how important income is for an individual's happiness?Existing studies in psychology have found a positive correlation between economic well-being (socioeconomic status) and subjective well-being (happiness). However, this positive relationship is weak and a large percentage of human happiness remains unexplained.

Although the mentioned studies make a good approximation of the existing relationship between income and happiness, the characteristics or specification of the function that generates the relationship between these two variables is often assumed to be linear and positive. The main objective of this paper is to investigate further the relationship between subjective and economic well-being. In this study different specifications and approaches are used to approximate the relationship between these variables.

An empirical analysis is made from the results of a survey conducted in two Mexican cities. The investigation studies the impact of demographic, social, and economic variables on subjective well-being in Mexico. Several hypotheses are tested to identify the relationship between household income and individual well-being. It is found that income does not have a strong influence on neither well-being nor on the probability of happiness. However, people tend to overstress the impact that additional income would have on their subjective well-being. This fact could explain the importance that people place on increasing their income level, and it could possibly explain the relative sense of dissatisfaction once a higher income level is achieved.

The relationship between income and the sense of basic need satisfaction is also explored. A main assumption in economic theory suggests the existence of a direct relationship between these variables; however, empirical results show this relationship to be extremely weak. Results indicate that subjective well-being is positively related to the sense of basic need satisfaction but not to income.

     

The Quality of Life in China

The Asia Barometer Survey of 2,000 respondents reveals that substantial majorities of the Chinese people experience feelings of happiness, enjoyment, and accomplishment. In fact, the proportion experiencing these indicators of a high quality of life are larger in China than in some more prosperous countries. Favorable historical comparison, sustained high economic growth, satisfaction with interpersonal life, and a high percentage of married people are among the explanations for China’s prevalence of subjective well-being. The Chinese people’s high levels of satisfaction with their interpersonal, material, and nonmaterial life domains, their positive assessments of their relative living standards, and their high rate of marriage are three direct positive influences on subjective well-being. Value priorities and other demographic characteristics also have indirect bearings on subjective well-being in China.     

Capabilities and Choices: Do They Make Sen’se for Understanding Objective and Subjective Well-Being? An Empirical Test of Sen’s Capability Framework on German and British Panel Data

In Sen’s Capability Approach (CA) well-being can be defined as the freedom of choice to achieve the things in life which one has reason to value most for his or her personal life. Capabilities are in Sen’s vocabulary therefore the real freedoms people have or the opportunities available to them. In this paper we examine the impact of capabilities alongside choices on well-being. There is a lot of theoretical work on Sen’s capability framework but still a lack of empirical research in measuring and testing his capability model especially in a dynamic perspective. The contribution of the paper is first to test Sen’s theoretical CA approach empirically using 25 years of German and 18 years of British data. Second, to examine to what extent the capability approach can explain long-term changes in well-being and third to view the impact on subjective as well as objective well-being in two clearly distinct welfare states. Three measures of well-being are constructed: life satisfaction for subjective well-being and relative income and employment security for objective well-being. We ran random and fixed effects GLS models. The findings strongly support Sen’s capabilities framework and provide evidence on the way capabilities, choices and constraints matter for objective and subjective well-being. Capabilities pertaining to human capital, trust, altruism and risk taking, and choices to family, work-leisure, lifestyle and social behaviour show to strongly affect long-term changes in subjective and objective well-being though in a different way largely depending on the type of well-being measure used.     

The Association Between Perceived Income Inequality and Subjective Well-being: Evidence from a Social Survey in Japan

Previous studies have shown that income inequality in society is negatively associated with individuals subjective well-being (SWB), such as their perceived happiness and self-rated health (SRH). However, it is not realistic to assume that individuals have precise information about actual income distribution measured by the Gini coefficient or other statistical measures. In the current study, we examined how perceived income inequality, rather than actual inequality, was associated with SWB, using cross-sectional data collected from a nationwide, Internet survey conducted in Japan (N = 10,432). We also examined how this association was confounded by individuals’ objective and subjective income status, considering the possibility that individuals with lower income status are more inclined to both perceive income inequality and feel unhappy/unhealthy. In our analysis, we focused on the perception of widening income inequality (as perceived income inequality), perceived happiness and SRH (as SWB), and household income and living standards compared with 1 year ago and compared with others (as income status). We also controlled for personality traits. We obtained three key findings: (1) perceived income inequality was negatively associated with SWB; (2) both perceived income inequality and SWB were associated with income status; and (3) the association between perceived income inequality and SWB was attenuated after controlling for income status, but not fully for perceived happiness. These findings suggest that perceived income inequality, which links actual income inequality to SWB, should be further studied.     

Economic inequality,status perceptions,and subjective well-being in China's transitional economy

Situated in the dynamic institutional environment of China's transitional economy, this study investigates the intricate relationships among economic inequality, status perceptions, and subjective well-being. Empirical evidence is drawn from national survey data collected from urban China. Statistical analyses show that multiple indicators of economic well-being exert a significant effect on self-perceived social status and status change and on subjective well-being. Positive status perceptions further enhance one's subjective well-being. Some of these effects are also moderated by contextual inequality. This study advances the literature by moving beyond income-based measures to examine the consequences of economic disparity. It also shows that status perceptions are the key nexus to probe the impacts of economic well-being and the sources of life satisfaction. Findings further direct our attention to important interplays between the individual-level socioeconomic conditions and the contextual inequality in achieving a deeper understanding of the consequences of socioeconomic inequality.     

How Education Enhances Happiness: Comparison of Mediating Factors in Four East Asian Countries

Educational philosophers contend that education enhances autonomy and thus happiness, but empirical studies rarely explore the positive influence of education on happiness. Based on the previous finding that being better connected to the outside world makes people happy, this study examines the possibility that how well an individual connects to the world accounts for the positive association between education and happiness. Analyzing survey data from four East Asian countries, we find a common pattern among Japan, Taiwan and South Korea. Although both monetary and non-monetary factors play a role in explaining the relationship between education and higher reports of happiness, monetary factor is relatively unimportant whereas non-monetary factors, such as interpersonal network and degree of cosmopolitanism, account for a significant part of the association between education and happiness. China is exceptional due to its relative importance of personal income in accounting for happiness. In short, individuals who receive more education have more extensive social networks as well as greater involvement with the wider world; these life conditions are positively related with happiness. By enhancing one’s ability and propensity to connect with the wider social world, education may improve an individual’s subjective well-being.     

Social Capital,Government and Democracy Satisfaction,and Happiness in Turkey: A Comparison of Surveys in 1999 and 2008

Based on data from a 1999 and a 2008 European Values Survey, the main objective of this study is to explore the relationship between a variety of social capital indicators, satisfaction with government and democracy, and subjective well-being. Happiness and life satisfaction were used as outcome measures of subjective well-being. The indicators of social capital used in this study are general trust, trust in institutions, political engagement, concern for others, societal norms, and membership in volunteer organizations. The analyses reveal a significant increase in happiness, life satisfaction, and many social capital variables between 1999 and 2008. Generalized trust, trust in institutions, government satisfaction, and democracy satisfaction are positive correlates of well-being, although some relationships are significant only in 2008. Several demographic variables are also linked with subjective well-being such as income, employment status, age, gender, and education. We discuss the findings in relation to the significant societal, economic, and political changes experienced in Turkey between 1999 and 2008. Policy implications are also emphasized such as improved trust among individuals, trustworthiness of government institutions, and functioning of democracy.     

Migrant Workers and Workplace Bullying in Urban China

Trends of subjective well-being (SWB) in transition countries are peculiar: they show substantial changes that are more strongly correlated with the trends of GDP than in other developed countries. This paper examines the role of the trends of GDP and of social trust in predicting the trends of well-being. We find that the strength of the relationship between social trust and SWB over the medium-term is comparable to that of GDP. We conclude that in the medium-term, even in countries where material concerns strongly affect well-being, social trust is a powerful predictor of the trends of SWB. However, in the short run the relationship between social trust and SWB does not hold and GDP stands out as the only significant correlate of SWB.     

Healthy,Wealthy, Wise,and Happy? Assessing Age Differences in Evaluative and Emotional Well-Being Among Mature Adults from Five Low- and Middle-Income Countries

This study assesses the relationship between age and two dimensions of subjective well-being—evaluative and emotional—among mature adults from five low-and middle-income countries. We use data from the World Health Organization’s Study on Global AGEing and Adult Health to contrast the associations of age with subjective well-being when controlling only for gender with the corresponding partial associations when including a richer set of covariates. Adjusting only for gender, we find negative associations of age with evaluative well-being, while the corresponding age gradients for emotional well-being are relatively flat. By contrast, adjusting for further socio-demographic factors results in positive associations of age with both evaluative and emotional well-being. Oaxaca-Blinder decompositions allow us to explore the roles of two factors to account for any unadjusted age differences in subjective well-being: age-group differences in individual characteristics and life circumstances, and age-specific associations of individual characteristics and life circumstances with subjective well-being. While adverse circumstances such as poor health and low income contribute to lower levels of evaluative well-being among older adults, age per se is—ceteris paribus—positively associated with subjective well-being. Even in poorer countries, older age does not need to be a time of low subjective well-being. Policies aimed at preserving income and limiting or compensating old-age disability appear to be key for maintaining subjective well-being among older adults.

     

Work-Life Conflict and Social Inequality in Western Europe

Recent debates on time-use suggest that there is an inverse relationship between time poverty and income poverty (Aguiar and Hurst in Q J Econ C(3):969–1006, 2007), with Hammermesh and Lee (Rev Econ Stat 89(2):374–383, 2007) suggesting much time poverty is ‘yuppie kvetch’ or ‘complaining’. Gershuny (Soc Res Int Q Soc Sci 72(2):287–314, 2005) argues that busyness is the ‘badge of honour’: being busy is now a positive, privileged position and it is high status people who work long hours and feel busy. Is this also true of work-life conflict? This paper explores the relationship between work-life tension and social inequality, as measured by social class, drawing on evidence from the European Social Survey. To what extent is work-life conflict a problem of the (comparatively) rich and privileged professional/managerial classes, and is this true across European countries? The countries selected offer a range of institutional and policy configurations to maximise variation. Using regression modelling of an index of subjective work-life conflict, we find that in all the countries under study, work-life conflict is higher among professionals than non-professionals. Part of this is explained by the fact that professionals work longer hours and experience more work pressure than other social classes, though the effect remains even after accounting for these factors. While levels of work-life conflict vary across the countries studied, country variation in class differences is modest. We consider other explanations of why professionals report higher work-life conflict and the implications of our findings for debates on social inequality.     

Trust,Social Networks and Subjective Wellbeing in China

Using data from the World Values Survey, this study examines the associations among trust, social networks and subjective wellbeing in China. We address the endogenous nature of trust and social networks, and examine how these elements of social capital affect subjective wellbeing. We also explore the interplay between trust and social networks. Existing literature suggests that trust and social networks positively impact wellbeing, with one strand of the literature suggesting that in developed countries social capital is a stronger determinant of wellbeing than income. However, we find that this is not the case for China (a developing country) where the effects of trust and social networks on wellbeing are found to be relatively weaker compared to the effect of income.     

Gender Differences in Subjective Well-Being: Comparing Societies with Respect to Gender Equality

These analyses explore the relationship between gender inequality and subjective well-being. The hypothesis was tested as to whether societal gender inequality is related to the size of gender differences in subjective well-being in various societies. Results come from comparative data sets (World Values Survey, involving 57 countries; OASIS project, involving Norway, England, Germany, Spain and Israel). The size of gender differences varied with the extent of societal gender inequality and the cultural attitudes regarding gender equality in different countries. Including individual resources like education and income in the analyses reduced the size of gender and country differences. Gender differences in subjective well-being could therefore be related to gender specific access to goal relevant resources.     

Subjective Well-Being in China: Associations with Absolute,Relative, and Perceived Economic Circumstances

Numerous studies examining the impact of income on subjective well-being (SWB) have found significant positive relationships exhibiting decreasing marginal returns. However, the impact of economic circumstances on SWB is better captured through a combination of income, wealth (per capita net worth), and perceived and relative economic conditions. Using data from the Chinese Household Income Project, I find that within rural and urban China, wealth significantly predicts SWB, exhibiting decreasing marginal returns independent of more common measures of economic circumstances such as income and occupational status. Within urban China, these associations decrease in magnitude and significance with the addition of objective relative measures of wealth and income. Finally, I find that subjective perceptions of relative standard of living are strongly associated with SWB independent of other measures. These results highlight the importance of using multiple objective and subjective measures of economic circumstances, demonstrating potential limitations of studies that have focused exclusively on income as a predictor of well-being. Results are interpreted within the context of China’s changing social and economic structure.     

Explaining Low Subjective Well-Being of Persons with Disabilities in Europe: The Impact of Disability, Personal Resources, Participation and Socio-Economic Status

Persons with chronic disabilities report the lowest subjective well-being (SWB) in many countries. The gap in SWB compared with the non-disabled population is smaller in some countries than in others. Data from the European Social Survey were analysed in order to: (1) describe the inequality in SWB in 21 European countries; and (2) identify the main determinants of this inequality in SWB. Data on a range of topics of a total of 40,605 persons, including 2,846 persons with serious chronic disabilities, were used of the European Social Survey. SWB was measured using multi-item scales for ‘emotional well-being’ and ‘satisfying life’. Variables on disability, socio-demographics (age, gender, household composition), socio-economic status (level of education, net household income), participation (paid work, voluntary work, social contacts), and personal resources (supportive relationships, social cohesion, vitality, optimism, resilience, perceived autonomy, perceived accomplishment, perceived capacity, perceived engagement, perceived meaning and purpose) were entered stepwise in regression models of SWB. The results show that persons with disabilities are in a disadvantaged position in terms of SWB in all countries. In the Northern countries, the gaps between disabled and non-disabled persons are smaller than in Eastern European countries. In all countries inequality in SWB is explained mostly by personal resources and not by the level of disability, socio-economic status or level of participation in work. The implications of these findings for policy and practice (e.g. social cohesion and physical exercise programs) are discussed.