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.     

The Influence of Water Access in Subjective Well-Being: Some Evidence in Yucatan, Mexico

The literature on happiness or subjective well-being has explored the determinants of happiness without taking into consideration the role that water plays. In this paper we attempt to draw attention to water in subjective well-being studies. Approximately one hundred million people do not have access to water. A lack of clean water causes diseases such as diarrhea and cholera, responsible for around 5% of the total deaths in the world. Access to water should therefore be a necessary asset in life. In order to consider access to water, we estimate its influence on subjective well-being using data from rural Yucatan, Mexico. Residents in Yucatan suffer from low quality access to water and there are also imperfections in the management of the service, such as water cuts. We estimate the influence of water on subjective well-being, finding a positive and significant relationship. In a second stage of the research, we relate water access variables to subjective well-being, the health and the water domain of life, finding significant results. These results make it possible to formulate political measures concerning access to water and happiness maximization. We demonstrate that access to water is important for well-being in Yucatan and might be important in many other places; we therefore encourage future research to contemplate water satisfaction and water variables in their analysis.     

Environment and Happiness: New Evidence for Spain

This paper explores the relationship between air pollution, climate and reported subjective well-being (or happiness) in Spanish regions. The results show that, after controlling for most of the socio-economic variables affecting happiness, there are still significant regional differences in subjective well-being. Evidence also suggests that climate and air pollution variables play a significant role in explaining these regional differences in happiness. The analysis also allows us to calculate the monetary value of air quality and climate, deriving the average marginal rate of substitution between income and air quality and climate for the Spanish regions.     

The relationship between income and subjective well-being: Relative or absolute?

Although it appears that income and subjective well-being correlate in within-country studies (Diener, 1984), a debate has focused on whether this relationship is relative (Easterlin, 1974) or absolute (Veenhoven, 1988, 1991). The absolute argument advanced by Veenhoven states that income helps individuals meet certain universal needs and therefore that income, at least at lower levels, is a cause of subjective well-being. The relativity argument is based on the idea that the impact of income or other resources depends on changeable standards such as those derived from expectancies, habituation levels, and social comparisons. Two studies which empirically examine these positions are presented: one based on 18 032 college studies in 39 countries, and one based on 10 year longitudinal data in a probability sample of 4 942 American adults. Modest but significant correlations were found in the U.S. between income and well-being, but the cross-country correlations were larger. No evidence for the influence of relative standards on income was found: (1) Incomechange did not produce effects beyond the effect of income level per se, (2) African-Americans and the poorly educated did not derive greater happiness from specific levels of income, (3) Income produced the same levels of happiness in poorer and richer areas of the U.S., and (4) Affluence correlated with subjective well-being both across countries and within the U.S. Income appeared to produce lesser increases in subjective well-being at higher income levels in the U.S., but this pattern was not evident across countries. Conceptual and empirical questions about the universal needs position are noted. Suggestions for further explorations of the relativistic position are offered.     

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.     

Poverty and Subjective Well-being in Mexico

There are two tendencies in the literatureregarding the relationship between income andsubjective well-being. The first tendencymaintains that there is a strong relationshipbetween these two variables, and that thepoorer the population, the more pronounced thisrelationship. The second tendency downplaysthis relationship, arguing that a largepercentage of happiness cannot be explained byeconomic variables. The objective of this studywas to compare the subjective well-being ofthree socioeconomic groups – extremely poor,moderately poor and not poor – and to discoverthe combination of subjective well-beingfactors that makes it possible to predict thesocioeconomic group to which subjects belong.Subjective well-being was measured by using aninstrument developed by Palomar Lever (2000) andconsisting of eleven related factors thatinquire into the subjects' satisfaction ineleven areas of life. The results indicatestatistically significant differences in nearlyall the subjective well-being factors inrelation to the socioeconomic group to whichsubjects belong, with the poorest subjectsreporting the least satisfaction. In additionsome differences were found in relation to sexand age. Also, low correlations were observedbetween income and subjective well-being in theextremely poor and moderately poor groups, withmore of these correlations in the first group,followed by the last. Finally, it was foundthat membership in the socioeconomic groups canbe predicted by a combination of subjectivewell-being factors such as satisfaction withone's recreational activities, socialsurroundings, personal development and couplerelationship.     

Agent-Based Simulations of Subjective Well-Being

There has been extensive empirical research in recent years pointing to a weak correlation between economic growth and subjective well-being (happiness), at least for developed economies (i.e. the so-called ‘Easterlin paradox’). Recent findings from the behavioural sciences and happiness literature link this paradoxical relationship to negative externalities on utility imposed by social comparison (i.e. relative income with respect to others) and adaptation (habituation to own income in the past). We believe that the type of economic growth (pro-poor, pro-middle, pro-rich, neutral), in combination with sensitivity to social comparison and past income, is a key determinant of happiness trajectories and future utility levels. With the use of agent-based simulations we examine the long-term dynamics of subjective-well-being by focusing attention on the type of growth process rather than the mere size of income growth. We generally find that pro-middle (and balanced) growth corresponds to much higher levels of long-term happiness in comparison to pro-rich growth.     

Social Capital or Social Cohesion: What Matters For Subjective Well-Being?

The theoretical analysis of the concepts of social capital and of social cohesion shows that social capital should be considered as a micro concept whereas social cohesion, being a broader concept than social capital, is a more appropriate concept for macro analysis. Therefore, we suggest that data on the individual level should only be used to analyze the relationship between social capital, social cohesion indicators and subjective well-being and that they do not allow commenting on the level of social cohesion in a society. For this last type of analyses aggregated indicators of social cohesion have to be computed which is not the issue of this paper. Our empirical analysis is based on individual data for Luxembourg in 2008. In general, our results suggest that investments in social capital generate monetary returns (increased income) and psychic returns (increased subjective well-being) even in a highly developed and multicultural country like Luxembourg. When we are adding on the micro level variables representing the economic domain of social cohesion following Bernard (1999), then we observe that this domain also has an effect on income and on subjective well-being. Therefore, we recommend including the economic domain in any future analysis using the concept of social cohesion.     

Money Buys Financial Security and Psychological Need Satisfaction: Testing Need Theory in Affluence

The most prominent theory to explain the curvilinear relationship between income and subjective well-being (SWB) is need theory, which proposes that increased income and wealth can lead to increased well-being in poverty because money is used to satisfy basic physiological needs. The present study tests the tenets of need theory by proposing that money can buy happiness beyond poverty if the money satisfies higher-order needs. Findings indicate that in older adults (n = 1,284), as economic standing rises, so do individual perceptions of financial security (a safety need), which in turn increases overall life satisfaction. Further, a path model tested the degree to which financial security and psychological need satisfaction mediated the path from economic standing to life satisfaction and demonstrated the complete mediation through higher-order needs—there was a 66% reduction in the direct link through financial security and a 34% reduction through psychological need satisfaction. Discussion focuses on how these mediation and path models extend need theory.     

Measuring Well-being Across Europe: Description of the ESS Well-being Module and Preliminary Findings

It has become customary to judge the success of a society through the use of objective indicators, predominantly economic and social ones. Yet in most developed nations, increases in income, education and health have arguably not produced comparable increases in happiness or life satisfaction. While much has been learned from the introduction of subjective measures of global happiness or life satisfaction into surveys, significant recent progress in the development of high-quality subjective measures of personal and social well-being has not been fully exploited. This article describes the development of a set of well-being indicators which were included in Round 3 of the European Social Survey. This Well-being Module seeks to evaluate the success of European countries in promoting the personal and social well-being of their citizens. In addition to providing a better understanding of domain-specific measures, such as those relating to family, work and income, the design of the Well-being Module recognises that advancement in the field requires us to look beyond measures which focus on how people feel (happiness, pleasure, satisfaction) to measures which are more concerned with how well they function. This also shifts the emphasis from relatively transient states of well-being to measures of more sustainable well-being. The ESS Well-being Module represents one of the first systematic attempts to create a set of policy-relevant national well-being accounts.

Immigrants’ Sense of Belonging to the Host Country: The Role of Life Satisfaction,Language Proficiency,and Religious Motives

This paper focuses on a significant concept in migration studies: immigrants’ sense of belonging to the host society. Drawing upon the literature of immigration and subjective well-being, we proposed a model in which life satisfaction is a major predictor of immigrants’ sense of belonging, and is explained by background variables including religious affiliation, religious motivation, native language proficiency and ethnic segregation. The study was based on a survey of two groups of highly skilled migrants in Israel; immigrants from France and the Former Soviet Union who moved to Israel in the last two decades. The findings suggest that, as expected, life satisfaction had a significant influence on immigrants’ sense of belonging and served as a mediator variable in the model. Whereas ethnic segregation was not found to be a significant parameter in the model, religious motivation and Hebrew language proficiency were found to be prominent. In light of the literature, we also discuss the importance of religious motivations to immigrants’ subjective well-being, identity, and sense of belonging.

     

Economic Migration and Happiness: Comparing Immigrants’ and Natives’ Happiness Gains From Income

Research on happiness casts doubt on the notion that increases in income generally bring greater happiness. This finding can be taken to imply that economic migration might fail to result in increased happiness for the migrants: migration as a means of increasing one’s income might be no more effective in raising happiness than other means of increasing one’s income. This implication is counterintuitive: it suggests that migrants are mistaken in believing that economic migration is a path to improving one’s well-being, at least to the extent that well-being means (or includes) happiness. This paper considers a scenario in which it is less likely that migrants are simply mistaken in this regard. The finding that increased incomes do not lead to greater happiness is an average (non)effect—and migrants might be exceptional in this regard, gaining happiness from increased incomes to a greater extent than most people. The analysis here, using data from the World Values Survey, finds that the association between income and happiness is indeed stronger for immigrants in the USA than for natives—but even for immigrants that association is still relatively weak. The discussion then considers this finding in light of the fact that immigrants also report lower levels of happiness than natives after controlling for other variables.     

Family Structure and Subjective Economic Well-Being: Some New Evidence

The paper investigates the main socio-demographic and economic determinants of subjective economic well-being in different typologies of households. Previous studies have used dummy variables to explore the effect of family structure. In this paper, however four different models—one for each family typology—have been estimated to test if each selected explanatory variable is significant and how it acts in determining the level of subjective economic well-being. To achieve this, we apply an under-used logit model—the partial proportional ordered model. Our analysis, based on data from the 2005 Italian Survey on Income and Living Conditions highlights the main variables affecting the subjective economic well-being of all household typologies. These main variables are related to income adequacy, such as being able to afford housing, clothes and holidays, and also include the work-status and level of education of the respondent. These variables produce notable differences in the level of subjective economic well-being. We find that couples with no children have the highest level of perceived economic well-being, while couples with two or more children and even more so one-person households are more economically insecure.     

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.     

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.

     

The Impact of Economic Crisis on Happiness

There is a common belief that economic crisis will lead to a decrease in subjective wellbeing. Previous studies indicate that income is correlated with happiness and unemployment with unhappiness. The relationship between increased income and happiness is well documented while the impact of decreased income has been less explored. The aim of this paper is to study how the economic downfall in Iceland, followed by reduced income and increased unemployment, affects happiness as well as to explore which groups are most vulnerable to changes in happiness and which are most resilient. The study is a longitudinal, nationally representative postal survey which assessed 5,918 individual’s aged 18–79. A total of 4,092 (77.3%) answered again in 2009. The relationship between economic factors and happiness was explored using multiple linear regression to find out how much they explain of the happiness variance and the changes in happiness, together with demographic factors, health and social relationships. Results indicate that income and unemployment did not predict happiness but financial difficulties did. A decrease in happiness was detected after the collapse. The change in happiness from 2007 to 2009 was normally distributed, 40% had the same score in both years and an equal number increased as decreased. The explored factors did not explain the changes in happiness. The economic crisis had a limited affect on happiness. Those with financial difficulties were hardest hit. Changes in happiness need to be studied further since they are not well explained by the factors which influence cross-sectional levels of happiness.     

A first glance into the black box of life satisfaction surrounding childbearing

The vast majority of studies looking into the relationship between childbearing and subjective well-being use overall measures where respondents either report their general level of happiness or their life satisfaction, leaving substantial doubt about the underlying mechanisms. However, life satisfaction and happiness are intuitively multidimensional concepts, simply because there cannot be only one aspect that affects individuals' well-being. In this study, by considering seventeen specific life satisfaction domains, these features come out very clearly. Whereas all the domains considered matter for the overall life satisfaction, only three of them, namely satisfaction with leisure, health and satisfaction with the partnership, change dramatically surrounding childbearing events. Even though we cannot generalise (since these results stem from one particular panel survey, i.e., Household Income and Labour Dynamics in Australia data), it appears that the typical anticipation and post-child decrease of life satisfaction, so often found in existing studies, stems from changes in these three domains.

     

Determinants of Subjective Well-Being and Poverty in Rural Pakistan: A Micro-Level Study

Drawing on unique survey data for rural Pakistan, we investigate the impact of socio-demographic factors on happiness index with particular emphasis on subjective well-being measurement to evaluate poverty and its different components. The data elicits information on overall well-being in terms of household’s happiness with the current socio-economic status. We estimate a happiness model to explore to what extent a well-being perspective adds to our understanding of poverty. We find that the well-being approach closely depicts the idea of well-being poverty in terms of the level education, health and income which matter significantly. Moreover unlike developed nations where children have a negative impact on overall well-being, this study suggests a positive impact on well-being and poverty. As studies employing good data from developing countries are rare, this paper can potentially make a good contribution to the existing happiness literature, with special reference to Pakistan.     

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.     

Income and Happiness in Time of Post-Communist Modernization

This paper discusses the relations between economic development, family income, and happiness in post-communist Poland from the point of view of Inglehart’s theory of modernization. The happiness is understood as satisfaction with income and life, and as psychological well-being. The analysis of survey data yields the conclusion that economic development reduces the strength of the relations between income and satisfaction as well as between income and psychological well-being. These findings may be explained by changes in the value system from collectivist/materialist to individualist/post-materialist, even when these values are not directly measured. The analyzed data are from a series of representative surveys conducted in Poland during a period of political and economic transformation (i.e., between 1989 and 2008). Official statistical data on Polish economic development during the same period are used as a background for survey results. The relations between income and happiness change in Poland in a way consistent with Inglehart’s modernization theory.