TY - JOUR

T1 - Inequality and Happiness

T2 - When Perceived Social Mobility and Economic Reality Do Not Match

AU - Bjørnskov, Christian

AU - Dreher, Axel

AU - Fischer, Justina A.V.

AU - Schnellenbach, Jan

AU - Gehring, Kai

N1 - Campus adgang til artiklen / Campus access to the article

PY - 2013

Y1 - 2013

N2 - We argue that perceived fairness of the income generation process affects the association between income inequality and subjective well-being, and that there are systematic differences in this regard between countries that are characterized by a high or, respectively, low level of actual fairness. Using a simple model of individual labor market participation under uncertainty, we predict that high levels of perceived fairness cause higher levels of individualwelfare, and lower support for income redistribution. Income inequality is predicted to have a more favorable impact on subjective well-being for individuals with high fairness perceptions. This relationship is predicted to be stronger in societies that are characterized by low actual fairness. Using data on subjective well-being and a broad set of fairness measures from a pseudo micro-panel from the WVS over the 1990–2008 period, we find strong support for the negative (positive) association between fairness perceptions andthe demand for more equal incomes (subjective well-being). We also find strong empirical support for the predicted differences in individual tolerance for income inequality, and the predicted influence of actual fairness.

AB - We argue that perceived fairness of the income generation process affects the association between income inequality and subjective well-being, and that there are systematic differences in this regard between countries that are characterized by a high or, respectively, low level of actual fairness. Using a simple model of individual labor market participation under uncertainty, we predict that high levels of perceived fairness cause higher levels of individualwelfare, and lower support for income redistribution. Income inequality is predicted to have a more favorable impact on subjective well-being for individuals with high fairness perceptions. This relationship is predicted to be stronger in societies that are characterized by low actual fairness. Using data on subjective well-being and a broad set of fairness measures from a pseudo micro-panel from the WVS over the 1990–2008 period, we find strong support for the negative (positive) association between fairness perceptions andthe demand for more equal incomes (subjective well-being). We also find strong empirical support for the predicted differences in individual tolerance for income inequality, and the predicted influence of actual fairness.

KW - Happiness

KW - Life satisfaction

KW - Subjective well-being

KW - Inequality

KW - Income distribution

KW - Redistribution

KW - Political ideology

KW - Justice

KW - Fairness

KW - World Values Survey

U2 - 10.1016/j.jebo.2013.03.017

DO - 10.1016/j.jebo.2013.03.017

M3 - Journal article

VL - 91

SP - 75

EP - 92

JO - Journal of Economic Behavior & Organization

JF - Journal of Economic Behavior & Organization

SN - 0167-2681

ER -