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Journal of Happiness Studies

, Volume 20, Issue 3, pp 777–794 | Cite as

An Evaluation of Common Explanations for the Impact of Income Inequality on Life Satisfaction

  • Benjamin SchalembierEmail author
Research Paper

Abstract

This study explains how income inequality affects life satisfaction in Europe. Although research about the impact of income inequality on life satisfaction is inconclusive, authors suggest several reasons for its potential impact. In the literature section we discuss three types of explanations for the impact of inequality: pure aversion for inequality, aversion for inequality motivated by how an individual is personally affected by inequality and preferences for equality of opportunities. In order to test these explanations, we examine how three corresponding variables, respectively attitude towards redistribution, income and perceived mobility, interact with both actual and perceived income inequality in multilevel analyses using data from the European Values Survey. Our results reveal that there are significant differences between how people are affected by actual income inequality and how they are affected by perceived income inequality. The impact of perceived income inequality on life satisfaction depends on perceived mobility in society and income, while the impact of actual income inequality solely depends on perceived mobility. We conclude that traditional explanations often erroneously assume that people correctly assess income inequality. Moreover these explanations are more capable of clarifying the effect of perceived income inequality on life satisfaction than that of actual inequality.

Keywords

Income inequality Income distribution Life satisfaction Perceived income inequality Perceived mobility 

Notes

Acknowledgements

The author would like to thank Elsy Verhofstadt, Luc Van Ootegem, Brent Bleys, Walter van Trier, the editor and the reviewers for their helpful comments and valuable suggestions on earlier drafts.

Compliance with Ethical Standards

Conflict of interest

The author declares that he has no conflict of interest.

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Copyright information

© Springer Science+Business Media B.V., part of Springer Nature 2018

Authors and Affiliations

  1. 1.Faculty of Economics and Business Administration, Department of Social EconomicsGhent UniversityGhentBelgium

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