Which Inequality Makes People Dissatisfied with Their Lives? Evidence of the Link between Life Satisfaction and Inequalities

27 Pages Posted: 13 Mar 2015 Last revised: 28 Jul 2015

See all articles by Laura Ravazzini

Laura Ravazzini

University of Neuchatel; Swiss Centre of Expertise in the Social Sciences (FORS)

Florian Chávez-Juárez

Centro de Investigacion y Docencia Economicas

Date Written: July 27, 2015

Abstract

This paper aims at establishing a clear link between different types of inequality and life satisfaction in Europe. Indices of income inequality and of inequality of opportunity are proposed to identify the relationship with life satisfaction using six waves of the European Social Survey (ESS). In addition, reference groups based on similarly old and educated individuals are created to account for differences in relative income. Results show that income inequality, high levels of inequality of opportunity and negative relative socioeconomic status reduce people's life satisfaction in Europe. Moreover, variations in inequality of opportunity explain more than variations in income inequality. Our main results suggest that all socioeconomic groups are dissatisfied with income inequality, whereas primarily low socioeconomic groups worry about inequality of opportunity. We interpret our results advancing the hypothesis that high socioeconomic groups might fear to lose their advantaged position. This fear will then increase with income inequality. In contrast, limited social mobility reduces the satisfaction of disadvantaged groups, whereas it generates a lower risk of falling down for those with good circumstances and consequently no effects on their subjective well-being.

Keywords: subjective well-being, income inequality, inequality of opportunity

JEL Classification: D31, I31, J62

Suggested Citation

Ravazzini, Laura and Wendelspiess Chávez Juárez, Florian, Which Inequality Makes People Dissatisfied with Their Lives? Evidence of the Link between Life Satisfaction and Inequalities (July 27, 2015). Available at SSRN: https://ssrn.com/abstract=2577694 or http://dx.doi.org/10.2139/ssrn.2577694

Laura Ravazzini

University of Neuchatel ( email )

27, Fbg. de l'Hopital
Neuchatel, CH-2000
Switzerland

Swiss Centre of Expertise in the Social Sciences (FORS) ( email )

Bâtiment Géopolis, 5th floor
Lausanne, CH-1015
Switzerland

Florian Wendelspiess Chávez Juárez (Contact Author)

Centro de Investigacion y Docencia Economicas ( email )

Carretera Mexico-Toluca 3655
Lomas de Santa Fe
Mexico City, 01210
Mexico

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