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Inequality and Happiness: When Perceived Social Mobility and Economic Reality Do Not Match

  • 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 individual welfare, 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 and the demand for more equal incomes (subjectiveWe 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 individual welfare, 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 and the 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.show moreshow less

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Metadaten
Author: Christian Bjørnskov, Axel Dreher, Justina Fischer, Jan SchnellenbachORCiD, Kai Gehring
DOI:https://doi.org/10.1016/j.jebo.2013.03.017
ISSN:0167-2681
Title of the source (English):Journal of Economic Behavior & Organization
Document Type:Scientific journal article peer-reviewed
Language:English
Year of publication:2013
Tag:Fairness; Happiness; Income distribution; Inequality; Justice; Life satisfaction; Political ideology; Redistribution; Subjective well-being; World Values Survey
Volume/Year:91
First Page:75
Last Page:92
Faculty/Chair:Fakultät 5 Wirtschaft, Recht und Gesellschaft / FG VWL, insbesondere Mikroökonomik
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