Is inequality in subjective well-being meritocratic? Danish evidence from linked survey and administrative data

This paper decomposes inequality in subjective well-being into inequality due to socioeconomic background (SEB) and meritocratic inequality due to differences in individual merits such as school performance. We measure the meritocratic share of well-being, defined as the share of explained variation in life satisfaction attributable to variation in merits not related to SEB. The empirical evidence from Denmark combines survey information on well-being with administrative data on individual characteristics. We find systematic differences in well-being already in early adulthood, where differences in economic outcomes are not yet visible. At age 18–19, about 40 percent of the inequality in well-being is meritocratic. The role of merits rises to 65–85 percent in midlife (age 40–55), where it is also higher than the role of merits in income inequality. The positive conclusions that inequality in well-being is more meritocratic than income inequality and more meritocratic as people grow older get support by corresponding results using an equal opportunity approach.