Life Satisfaction and Income Inequality

By Paolo Verme. 2011

181 citations recorded by the source corpus.

Do people care about income inequality and does income inequality affect subjective well-being? Welfare theories can predict either a positive or a negative impact of income inequality on subjective well-being and empirical research has found evidence on a positive, negative or non significant relation. This paper attempts to determine some of the possible causes of such empirical heterogeneity. Using a very large sample of world citizens, the author tests the consistency of income inequality in predicting life satisfaction. The analysis finds that income inequality has a negative and significant effect on life satisfaction. This result is robust to changes in regressors and estimation choices and also persists across different income groups and across different types of countries. However, this relation is easily obscured or reversed by multicollinearity generated by the use of country and year fixed effects. This is particularly true if the number of data points for inequality is small, which is a common feature of cross-country or longitudinal studies.

Subfields: Health, Social Psychology, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/7ccf90c8e5fd3825529d17aa6f83a9d02e3756aa

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Citations in the corpus

Why Income Inequality Is Dissatisfying—Perceptions of Social Status and the Inequality-Satisfaction Link in Europe (2019, background): “This conceptual distinction and its theoretical implications are frequently overlooked in the literature, with relative deprivation arguments (also called relative income arguments; see Verme, 2011) used to theoretically back up empirical research (Neckerman and Torche, 2007).”
Income Inequality and Subjective Well-being: A Cross-National Study on the Conditional Effects of Individual and National Characteristics (2013, methodology): “Especially in happiness research this seems standard practice (e.g. Easterlin 2001; Alesina et al. 2004; Verme 2011). national characteristics condition this relation.”
Children’s Subjective Well-Being in Rich Countries (2013, background): “Empirical evidence confirms that on average high income inequality is associated to low subjective well-being (Verme, 2011).”
Attitudes to Income Inequality: Experimental and Survey Evidence (2014, background): “Effect is moderated by the perceived fairness of others, and whether the individual believes that others can be trusted Verme (2011) Cross- country WVS waves 1–4 Gini by country and year Life satisfaction Negative Van de Werfhorst and Salverda (2012) Crosscountry ESS round 4 Gini by country…”