Being Poor and Feeling Rich or Vice Versa? The Determinants of Unequal Income Positions in Old Age Across Europe

Individual prosperity and welfare can be measured using both objective and subjective criteria. Although theory and previous research suggest that these two methods can produce corresponding results, the measurements can also be inconsistent. Against this background, the current paper investigates the relationship between the objective income position of older Europeans (aged 50?+?years) and their perception of their financial situation, using the seventh wave of the Survey of Health, Aging, and Retirement in Europe (SHARE) conducted in 2017. The main research questions include (1) how is objective income distributed in old age across Europe?, (2) how do elderly Europeans evaluate their income situation subjectively?, (3) is there a discrepancy between the objective prosperity position and their subjective perception observable?, (4) are there country-specific differences that are observable?, and (5) how can such discrepancies be explained?

The results show that objective income positions can be congruent with subjective self-perceptions, both good (well-being) and bad (deprivation), of one’s income situation. However, this is not always the case, and country-specific variations do exist. In analyzing the causes of the 2 forms of nonconformance—namely, adaptation (satisfaction paradox) and dissonance (dissatisfaction dilemma)—this paper concludes that sociodemographic and socioeconomic determinants alone cannot account for discrepancies. The consideration of certain social-psychological influences or personality traits and especially social comparison processes (namely, with one’s past) is essential in explaining both the satisfaction paradox and the dissatisfaction dilemma.