IDEAS home Printed from https://ideas.repec.org/a/spr/jhappi/v19y2018i4d10.1007_s10902-017-9860-3.html
   My bibliography  Save this article

Income Inequality and Life Satisfaction: Unrelated Between Countries, Associated Within Countries Over Time

Author

Listed:
  • Martin Schröder

    (University of Marburg)

Abstract

This article shows for the first time that people are less satisfied when inequality in their country is higher than before, but not when inequality in their country is higher than in another country. It distinguishes this between- and within-country effect of inequality on life satisfaction by using hybrid regressions with the World Values Survey, the British Household Panel Study, the Australian panel study of Household Income and Labour Dynamics, the Korean Labor and Income Panel, the Russian Longitudinal Monitoring study, the Swiss Household Panel and the German Socio-Economic Panel. That life satisfaction is unaffected by long-run levels of inequality, but by changes of inequality over time, suggests that life satisfaction researchers should focus on changes of inequality over time to understand its influence on life satisfaction.

Suggested Citation

  • Martin Schröder, 2018. "Income Inequality and Life Satisfaction: Unrelated Between Countries, Associated Within Countries Over Time," Journal of Happiness Studies, Springer, vol. 19(4), pages 1021-1043, April.
    • Handle: RePEc:spr:jhappi:v:19:y:2018:i:4:d:10.1007_s10902-017-9860-3
    DOI: 10.1007/s10902-017-9860-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10902-017-9860-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10902-017-9860-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paolo Verme, 2011. "Life Satisfaction And Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(1), pages 111-127, March.
    2. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    3. David Cooper & W. McCausland & Ioannis Theodossiou, 2013. "Income Inequality and Wellbeing: The Plight of the Poor and the Curse of Permanent Inequality," Journal of Economic Issues, Taylor & Francis Journals, vol. 47(4), pages 939-958.
    4. Hirschman, Albert O., 1973. "The changing tolerance for income inequality in the course of economic development," World Development, Elsevier, vol. 1(12), pages 29-36, December.
    5. Jeremy K. Nguyen & Christopher M. Fleming & Jen-Je Su, 2015. "Does Income Inequality Make Us Less Happy?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 48(1), pages 15-32, March.
    6. Reinhard Schunck, 2013. "Within and between estimates in random-effects models: Advantages and drawbacks of correlated random effects and hybrid models," Stata Journal, StataCorp LP, vol. 13(1), pages 65-76, March.
    7. Alesina, Alberto & Di Tella, Rafael & MacCulloch, Robert, 2004. "Inequality and happiness: are Europeans and Americans different?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2009-2042, August.
    8. Richard A. Easterlin, 2013. "HAPPINESS, GROWTH, AND PUBLIC POLICY-super-†," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 1-15, January.
    9. Bell, Andrew & Jones, Kelvyn, 2015. "Explaining Fixed Effects: Random Effects Modeling of Time-Series Cross-Sectional and Panel Data," Political Science Research and Methods, Cambridge University Press, vol. 3(1), pages 133-153, January.
    10. Ozan Eksi & Neslihan Kaya, 2017. "Life Satisfaction and Keeping Up with Other Countries," Journal of Happiness Studies, Springer, vol. 18(1), pages 199-228, February.
    11. Cojocaru, Alexandru, 2014. "Fairness and inequality tolerance: Evidence from the Life in Transition Survey," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 590-608.
    12. Irena Grosfeld & Claudia Senik, 2010. "The emerging aversion to inequality," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(1), pages 1-26, January.
    13. Bjørnskov, Christian & Dreher, Axel & Fischer, Justina A.V. & Schnellenbach, Jan & Gehring, Kai, 2013. "Inequality and happiness: When perceived social mobility and economic reality do not match," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 75-92.
    14. Vivian Valdmanis, 2015. "Factors Affecting Well-Being at the State Level in the United States," Journal of Happiness Studies, Springer, vol. 16(4), pages 985-997, August.
    15. Jesper Rözer & Gerbert Kraaykamp, 2013. "Income Inequality and Subjective Well-being: A Cross-National Study on the Conditional Effects of Individual and National Characteristics," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(3), pages 1009-1023, September.
    16. Krzysztof Zagorski & Mariah Evans & Jonathan Kelley & Katarzyna Piotrowska, 2014. "Erratum to: Does National Income Inequality Affect Individuals’ Quality of Life in Europe? Inequality, Happiness, Finances, and Health," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(2), pages 939-939, September.
    17. Grosfeld, Irena & Senik, Claudia, 2010. "The emerging aversion to inequality - Evidence from subjective data," CEPREMAP Working Papers (Docweb) 1006, CEPREMAP.
    18. Ada Ferrer-i-Carbonell & Xavier Ramos, 2014. "Inequality And Happiness," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 1016-1027, December.
    19. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2008. "Lags And Leads in Life Satisfaction: a Test of the Baseline Hypothesis," Economic Journal, Royal Economic Society, vol. 118(529), pages 222-243, June.
    20. Hilke Brockmann & Jan Delhey & Christian Welzel & Hao Yuan, 2009. "The China Puzzle: Falling Happiness in a Rising Economy," Journal of Happiness Studies, Springer, vol. 10(4), pages 387-405, August.
    21. Morawetz, David, 1977. "Income Distribution and Self-Rated Happiness: Some Empirical Evidence," Economic Journal, Royal Economic Society, vol. 87(347), pages 511-522, September.
    22. Simone Schneider, 2012. "Income Inequality and its Consequences for Life Satisfaction: What Role do Social Cognitions Play?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 106(3), pages 419-438, May.
    23. Easterlin, Richard A., 2013. "Happiness, Growth, and Public Policy," IZA Discussion Papers 7234, Institute of Labor Economics (IZA).
    24. Helliwell, John F. & Huang, Haifang, 2008. "How's Your Government? International Evidence Linking Good Government and Well-Being," British Journal of Political Science, Cambridge University Press, vol. 38(4), pages 595-619, October.
    25. Ada Ferrer-i-Carbonell & Xavier Ramos, 2010. "Inequality Aversion and Risk Attitudes," SOEPpapers on Multidisciplinary Panel Data Research 271, DIW Berlin, The German Socio-Economic Panel (SOEP).
    26. Robert L. Kaufman, 1993. "Decomposing Longitudinal from Cross-Unit Effects in Panel and Pooled Cross-Sectional Designs," Sociological Methods & Research, , vol. 21(4), pages 482-504, May.
    27. Bruce Headey & Ruud Muffels & Gert Wagner, 2013. "Choices Which Change Life Satisfaction: Similar Results for Australia, Britain and Germany," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 112(3), pages 725-748, July.
    28. Fairbrother, Malcolm, 2014. "Two Multilevel Modeling Techniques for Analyzing Comparative Longitudinal Survey Datasets," Political Science Research and Methods, Cambridge University Press, vol. 2(1), pages 119-140, April.
    29. Krzysztof Zagorski & Mariah Evans & Jonathan Kelley & Katarzyna Piotrowska, 2014. "Does National Income Inequality Affect Individuals’ Quality of Life in Europe? Inequality, Happiness, Finances, and Health," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(3), pages 1089-1110, July.
    30. Shlomo Yitzhaki, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(2), pages 321-324.
    31. Albert O. Hirschman & Michael Rothschild, 1973. "The Changing Tolerance for Income Inequality in the Course of Economic DevelopmentWith A Mathematical Appendix," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(4), pages 544-566.
    32. L. Bryan, Mark & P. Jenkins, Stephen, 2013. "Regression analysis of country effects using multilevel data: a cautionary tale," ISER Working Paper Series 2013-14, Institute for Social and Economic Research.
    33. Max Haller & Markus Hadler, 2006. "How Social Relations and Structures can Produce Happiness and Unhappiness: An International Comparative Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 75(2), pages 169-216, January.
    34. Carol Graham & Andrew Felton, 2006. "Inequality and happiness: Insights from Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 107-122, April.
    35. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    36. Schwarze, Johannes & Harpfer, Marco, 2007. "Are people inequality averse, and do they prefer redistribution by the state?: Evidence from German longitudinal data on life satisfaction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 233-249, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Indera Ratna Irawati Pattinasarany, 2024. "Happiness amidst the COVID-19 pandemic in Indonesia: exploring gender, residence type, and pandemic severity," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Clark, Andrew E. & D'Ambrosio, Conchita, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," IZA Discussion Papers 8136, Institute of Labor Economics (IZA).
    2. Teresa Maria García-Muñoz & Juliette Milgram-Baleix & Omar Odeh-Odeh, 2019. "Inequality and Life Satisfaction in Low- and Middle-Income Countries: The Role of Opportunity," Societies, MDPI, vol. 9(2), pages 1-25, May.
    3. Woo Chang Kang & Jae Seung Lee & BK Song, 2020. "Envy and Pride: How Economic Inequality Deepens Happiness Inequality in South Korea," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(2), pages 617-637, July.
    4. Quang Tran, Tuyen & Viet Nguyen, Cuong & Van Vu, Huong, 2015. "Economic Inequality and Happiness: A quantitative study among the elderly in Rural Vietnam," MPRA Paper 81235, University Library of Munich, Germany, revised 14 Oct 2016.
    5. Tuyen Quang Tran & Cuong Viet Nguyen & Huong Vu, 2018. "Does Economic Inequality Affect the Quality of Life of Older People in Rural Vietnam?," Journal of Happiness Studies, Springer, vol. 19(3), pages 781-799, March.
    6. Teresa María García Muñoz & Juliette Milgram Baleix & Omar Odeh Odeh, 2022. "System Justification Beliefs and Life Satisfaction. The role of inequality aversion and support for redistribution," ThE Papers 22/15, Department of Economic Theory and Economic History of the University of Granada..
    7. Adalgiso Amendola & Roberto Dell’Anno & Lavinia Parisi, 2019. "Happiness and inequality in European countries: is it a matter of peer group comparisons?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 473-508, July.
    8. Sałach-Dróżdż Katarzyna, 2024. "Wealth inequality, income inequality, and subjective well-being: A cross-country study," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 60(3), pages 227-242.
    9. Jiawen Huang, 2019. "Income Inequality, Distributive Justice Beliefs, and Happiness in China: Evidence from a Nationwide Survey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(1), pages 83-105, February.
    10. Long Yang & Haiyang Lu & Meng Li, 2023. "Multidimensional Inequality and Subjective Well-Being in China: A Generalized Ordered Logit Model Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(3), pages 1021-1052, February.
    11. Peng Wang & Jay Pan & Zhehui Luo, 2015. "The Impact of Income Inequality on Individual Happiness: Evidence from China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(2), pages 413-435, April.
    12. T. Tavor & L. D. Gonen & M. Weber & U. Spiegel, 2018. "The Effects of Income Levels and Income Inequalities on Happiness," Journal of Happiness Studies, Springer, vol. 19(7), pages 2115-2137, October.
    13. Kalenborn, Christine & Lessmann, Christian, 2014. "Regional Income Inequality lowers Life Satisfaction: Evidence from OECD Countries," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100561, Verein für Socialpolitik / German Economic Association.
    14. Laura Ravazzini & Florian Chávez-Juárez, 2018. "Which Inequality Makes People Dissatisfied with Their Lives? Evidence of the Link Between Life Satisfaction and Inequalities," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(3), pages 1119-1143, June.
    15. Antonio M. Espín & Dolores Moreno-Herrero & José Sánchez-Campillo & José A. Rodríguez Martín, 2018. "Do Envy and Compassion Pave the Way to Unhappiness? Social Preferences and Life Satisfaction in a Spanish City," Journal of Happiness Studies, Springer, vol. 19(2), pages 443-469, February.
    16. Benjamin Schalembier, 2019. "An Evaluation of Common Explanations for the Impact of Income Inequality on Life Satisfaction," Journal of Happiness Studies, Springer, vol. 20(3), pages 777-794, March.
    17. Jiawen Huang & Yitong Fang, 2021. "Income Inequality, Neighbourhood Social Capital and Subjective Well-Being in China: Exploration of a Moderating Effect," IJERPH, MDPI, vol. 18(13), pages 1-18, June.
    18. Mikucka, Malgorzata & Sarracino, Francesco & Dubrow, Joshua K., 2017. "When Does Economic Growth Improve Life Satisfaction? Multilevel Analysis of the Roles of Social Trust and Income Inequality in 46 Countries, 1981–2012," World Development, Elsevier, vol. 93(C), pages 447-459.
    19. Hajdu, Tamás & Hajdu, Gábor, 2014. "Reduction of income inequality and subjective well-being in Europe," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-29.
    20. Zhang, Quanda & Awaworyi Churchill, Sefa, 2020. "Income inequality and subjective wellbeing: Panel data evidence from China," China Economic Review, Elsevier, vol. 60(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jhappi:v:19:y:2018:i:4:d:10.1007_s10902-017-9860-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.