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Social Indicators Research

, Volume 106, Issue 3, pp 419–438 | Cite as

Income Inequality and its Consequences for Life Satisfaction: What Role do Social Cognitions Play?

  • Simone M. SchneiderEmail author
Article

Abstract

While it is generally agreed that income inequality affects an individual’s well-being, researchers disagree on whether people living in areas of high income disparity report more or less happiness than those in more equal environments, thereby indicating the need to study how and why income inequality matters to the individual’s well-being. Findings on group-specific reaction patterns to income inequality further fuel this need. Alesina et al. (2004) argue that a preference for inequality and the perception of the possibility of social mobility account for the indistinct relationship between income inequality and subjective well-being. Combining this hypothesis with previous research on social cognition and drawing on social justice theory, this paper aims to demonstrate the mediating nature of perceptions of income inequality. It argues that the perceived legitimacy of distributive outcomes and procedures contributes to how income inequalities affect individuals and their sense of well-being. The empirical analysis is based on data from the International Social Justice Project, developed from face-to-face interviews with a representative sample of the German population. Using structural equation modeling, the paper finds structural biases in the perception of income inequality. The paper concludes that subjective well-being is a product of the individual’s perception and legitimating processes. The results indicate that social cognition is a useful tool for studies of income inequality and subjective well-being.

Keywords

Income inequality Well-being Social cognition Social justice 

Notes

Acknowledgments

I would like to thank Ruut Veenhoven, Jouni Häkli, Martin Groß and the anonymous reviewer for their valuable comments on earlier drafts of this article. I also want to express my gratitude to Bernd Wegener, who made research on this issue possible. For all statements of fact, data analyses and interpretation of results the author alone bears responsibility.

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Copyright information

© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  1. 1.Socio-Economic and Statistical Studies, Berlin Graduate School of Social SciencesHumboldt-Universität zu BerlinBerlinGermany

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