Income Inequality and Subjective Well-being: A Cross-National Study on the Conditional Effects of Individual and National Characteristics

Abstract

In this study we raise the question how a nation's income inequality affects subjective well-being. Using information on 195,091 individuals from 85 different countries from the World Value Surveys and the European Value Surveys, we established that in general, people living in more unequal countries report higher well-being than people from more equal countries. This association however does not apply to all people similarly. First, the positive effect of a nation's income inequality is weaker when individuals express more social and institutional trust, and underscore egalitarian norms to a larger extent. Second, the positive association between national income inequality and subjective wellbeing is less strong for people from countries with high levels of social and institutional trust. So, our research predominantly indicates that there are far-reaching effects of an individual's and a nation's trust on people's well-being.

Institutional Origins of Subjective Well-Being: Estimating the Effects of Economic Freedom on National Happiness

“…Column (4) considers three additional covariates that capture the potential effects of inequality and life satisfaction. Aside from the positive effect of longevity on happiness, the estimated relationship suggests that more unequal societies tend to experience greater happiness once the effects of economic freedom, income per capita and unemployment rate are controlled for which is consistent with earlier findings by Rözer and Kraaykamp (2013). Moreover, the inclusion of life expectancy and Gini coefficient in the base model specification does not render the economic freedom coefficient insignificant since it is significant at 10 %.…”

“…The relevance of income inequality in accounting for cross-national differences in the subjective well-being has been confirmed empirically by Alesina et al (2004), Headey et al (2004), Berg and Veenhoven (2010), Oishi et al (2011) and Rözer and Kraaykamp (2013). Cross-national studies indicate that people living in more unequal societies do not report lower subjective well-being than those living more egalitarian societies.…”

“…Following earlier attempts to establish the causal effects on subjective well-being (Easterlin 1974(Easterlin , 2001Winkelmann and Winkelmann 2000;Deaton 2008;Graham and Felton 2006;Stevenson and Wolfers 2008;Berg and Veenhoven 2010;Rözer and Kraaykamp 2013;Oishi et al 2013), three additional baseline explanatory variables are considered in our cross-country subjective well-being model: (1) income level, (2) unemployment rate, (3) life expectancy at birth, (4) Gini coefficient, and (5) health expenditure in the share of GDP. First, the data on GDP per capita is from Heston et al (2012) and captures the effect of income level on subjective well-being.…”

Happiness and life satisfaction in Rwanda

“…Patrick and Erickson's model (Patrick & Erickson, 1993), for example, suggests an association between self-reported health and subjective well-being; they argued that the diseases produce symptoms of varying severity which impact respectively on: personal functioning, general health perceptions, psychological aspect of well-being and social functioning. Health status has been reported to be associated with country level of economic development.…”

National income inequality and self-rated health: the differing impact of individual social trust across 89 countries

“…High-trusting people will be more often confronted with these problems because by their open and pro-social personality they are most likely to come into contact with people from other social strata. In addition, hightrusting people might be more receptive for the negative consequences of income inequality because they are most concerned with problems in their wider environment, and because they will try most actively to establish an understanding of why people can run into problems inadvertently (Lewis and Weigert 1985;Rözer and Kraaykamp 2012). On the one hand, these attitudes result, for example, in that people with high trust donate more to charity, are more active in voluntary work, more often offer social support, and are relatively tolerant towards ethnic minorities and people living on welfare (Rothstein and Uslaner 2005;Nannestad 2008).…”