Advertisement

Journal of Happiness Studies

, Volume 20, Issue 1, pp 203–228 | Cite as

Rising Income Inequality During the Great Recession Had No Impact on Subjective Wellbeing in Europe, 2003–2012

  • M. D. R. EvansEmail author
  • Jonathan Kelley
  • S. M. C. Kelley
  • C. G. E. Kelley
Research Paper
First Online:

Abstract

The Great Recession increased income inequality by an average of 6%. We assesses the impact of that on subjective wellbeing (happiness, life satisfaction). Data: European Quality of Life survey, 25 representative national samples at three time points, over 70,000 respondents. Analysis: variance-components multi-level models controlling for GDP per capita (an essential point) and individual-level predictors. Findings: income inequality has no statistically significant impact before, during, or after the Great Recession. Instead (contrary to much previous research) a straightforward individualistic utilitarian–materialist understanding is supported: money does increase wellbeing but inequality itself—the gap between rich and poor—is irrelevant.

Keywords

Subjective wellbeing Life satisfaction Happiness Utility Great Recession Inequality Europe Income GDP per capita Multi-level models Well-being Quality of life Socioeconomic development Income inequality Poverty 
This is a preview of subscription content, log in to check access.

References

  1. Aknin, L. B., Sandstrom, G. M., Dunn, E. W., & Norton, M. I. (2011). It’s the recipient that counts: Spending money on strong social ties leads to greater happiness than spending on weak social ties. PLoS ONE, 6(2), e17018.Google Scholar
  2. Alesina, A., Di Tella, R., & MacCulloch, R. (2004). Inequality and happiness: Are Europeans and Americans different? Journal of Public Economics, 88, 2009–2042.Google Scholar
  3. Argyle, M. (1999). Causes and correlates of happiness. In D. Kahneman, E. Diener, & N. Schwartz (Eds.), Well-being: The foundations of hedonic psychology (pp. 353–373). New York: Russell Sage Foundation.Google Scholar
  4. Babones, S. J. (2008). Income inequality and population health: Correlation and causality. Social Science and Medicine, 66, 1614–1626.Google Scholar
  5. Beckfield, J. (2004). Does income inequality harm health? New cross-national evidence. Journal of Health and Social Behavior, 45(3), 231–248.Google Scholar
  6. Bentham, J. (1780 [1907]). An introduction to the principles of morals and legislation. Oxford: Clarendon Press.Google Scholar
  7. Berg, M., & Veenhoven, R. (2010). Income inequality and happiness in 119 nations: In search for an optimum that does not appear to exist. In B. Greve (Ed.), Social policy and happiness in Europe (pp. 145–173). Cheltenham: Edward Elgar.Google Scholar
  8. Bertrand, M., Duflo, E., & Mullainathan, S. (2002). How much should we trust differences-in-differences estimates? NBER working paper series, 2002, No. 8841.Google Scholar
  9. Bobak, M., Pikhart, H., Rose, R., Hertzman, C., & Marmo, M. (2000). Socioeconomic factors, material inequalities, and perceived control in self-rated health: Cross-sectional data from seven post-Communist countries. Social Science and Medicine, 51, 1343–1350.Google Scholar
  10. Bollen, K. A. (1989). The consequences of measurement error. Structural Equations With Latent Variables. (pp. 151–169). New York, John Wiley.Google Scholar
  11. Breznau, N., Lykes, V. A., Kelley, J., & Evans, M. D. R. (2011). A clash of civilizations? Preferences for religious political leaders in 86 nations. Journal for the Scientific Study of Religion, 50(4), 671–691.Google Scholar
  12. Bygren, M. (2004). Pay reference standards and pay satisfaction: What do workers evaluate their pay against? Social Science Research, 33(2), 206–224.Google Scholar
  13. Calvo, R., Zheng, Y., Kumar, S., Olgiati, A., & Berkman, L. (2012). Well-being and social capital on planet earth: Cross-national evidence from 142 countries. PLoS ONE, 7(8), e42793.Google Scholar
  14. Clark, A. E., & Senik, C. (2010). Who compares to whom? The anatomy of income comparisons in Europe. Economic Journal, 120(544), 573–594.Google Scholar
  15. Coleman, J. S. (1990). Foundations of social theory. Cambridge, MA: Harvard University Press.Google Scholar
  16. Daly, M., & Rose R. (2007). First European quality of life survey: Key findings from a policy perspective (Vol. 1) Luxembourg www.eurofound.europa.eu: European foundation for the improvement of living and working conditions and office for official publications of the European Communities.
  17. Deaton, A. (2008). Income, health, and well-being around the world: Evidence from the gallup world poll. Journal of Economic Perspectives, 22, 53–72.Google Scholar
  18. Diener, E. (1984). Subjective well-being. Psychological Bulletin, 95, 542–575.Google Scholar
  19. Diener, E., Inglehart, R., & Tay, L. (2013). Theory and validity of life satisfaction scales. Social Indicators Research, 112(3), 497–527.Google Scholar
  20. Diener, E., & Suh, E. M. (1997). Measuring quality of life: Economic, social, and subjective indicators. Social Indicators Research, 40, 189–216.Google Scholar
  21. Dodds, P. S., Harris, K. D., Kloumann, I. M., Bliss, C. A., & Danforth, C. M. (2011). Temporal patterns of happiness and information in a global social network: Hedonometrics and Twitter. PLoS ONE, 6(12), e26752.Google Scholar
  22. Easterlin, R. (2005). Feeding the illusion of growth and happiness: A reply to Hagerty and Veenhoven. Social Indicators Research, 74, 429–443.Google Scholar
  23. Eckersley, R. (2015). Beyond inequality. Social Science and Medicine, 147(December), 121–125.Google Scholar
  24. Esping-Andersen, G., & Nedoluzhko, L. (2017). Inequality equilibria and individual well-being. Social Science Research, 62(February), 24–28.Google Scholar
  25. EuroFound. (2012). European quality of life surveys (EQLS): First EQLS in 2003. Brussels: http://www.eurofound.europa.eu/surveys/eqls/index.htm.
  26. EuroFound. (2013). Eurofound survey methodology. Brussels: http://www.eurofound.europa.eu/surveys/methodology/index.htm.
  27. EuroFound. (2016). European quality of life surveys: About. Timing of surveys. Brussels: https://www.eurofound.europa.eu/Surveys/european-quality-of-life-surveys.
  28. Evans, M. D. R., & Kelley, J. (2004). Australian economy and society 2002: Religion, morality, and public policy in international perspective, 1984–2002. Sydney: Federation Press.Google Scholar
  29. Evans, M. D. R., & Kelley, J. (2017). Communism, capitalism, and images of class: Effects of reference groups, reality, and regime in 43 nations and 110,000 individuals, 1987–2009. Cross-Cultural Research,  51(4), 315-359. doi: https://doi.org/10.1177/1069397116677963.Google Scholar
  30. Firebaugh, G. (1999). Empirics of world income inequality. American Journal of Sociology, 104, 1597–1630.Google Scholar
  31. Forest, K. B. (1996). Gender and the pathways to subjective well-being. Social Behavior and Personality, 24, 19–34.Google Scholar
  32. Frey, B. S., & Stutzer, A. (2002). What can economists learn from happiness research?. Journal of Economic Literature, 40, 402–435.Google Scholar
  33. Gini, C. (1921). Measurement of inequality of incomes. The Economic Journal, 31(121 March), 124–126.Google Scholar
  34. Graham, C., & Felton, A. (2006). Inequality and happiness: Insights from Latin America. Journal of Economic Inequality, 4, 107–122.Google Scholar
  35. Hagerty, M. R., & Veenhoven, R. (2003). Wealth and happiness revisited: Growing national income does go with greater happiness. Social Indicators Research, 64, 1–27.Google Scholar
  36. Headey, B., Kelley, J., & Wearing, A. J. (1993). Dimensions of mental-health: Life satisfaction, positive affect, anxiety and depression. Social Indicators Research, 29, 63–82.Google Scholar
  37. Headey, B., Muffels, R. J. A., & Wagner, G. (2013). Choices which change life satisfaction: Similar results for Australia, Britain and Germany. Social Indicators Research, 112(3), 725–748.Google Scholar
  38. Headey, B., & Wearing, A. J. (1992). Understanding happiness. Melbourne: Longman Cheshire.Google Scholar
  39. Hox, J. J. (1995). Applied multilevel analysis. Amsterdam: TT-Publikaties.Google Scholar
  40. Inglehart, R., & Baker, W. E. (2000). Modernization, cultural change, and the persistence of traditional values. American Sociological Review, 65(1), 19–51.Google Scholar
  41. Inglehart, R., & Klingemann, H. -D. (2000). Genes, culture, democracy, and happiness. In: E. Diener & E. M. Suh (Eds.), Culture and subjective well-being (pp. 165–184). Cambridge, MIT Press.Google Scholar
  42. Inglehart, R., & Welzel, C. (2005). Modernization, cultural change and democracy: The human development sequence. Cambridge: Cambridge University Press.Google Scholar
  43. International Monetary Fund (IMF). (2012). Gross domestic product. Finance and development. http://www.imf.org/external/pubs/ft/fandd/basics/gdp.htm. Accessed January 5, 2014.
  44. International Monetary Fund (IMF). (2016). World Economic Outlook Database. www.imf.org/external/ns/cs.aspx?id=29.
  45. Jagodinski, W. (2010). Economic, social, and cultural determinants of life satisfaction: Are there differences between Asia and Europe? Social Indicators Research, 97, 85–104.Google Scholar
  46. Jones, F. L., & Kelley, J. (1984). Decomposing differences between groups: A cautionary note on measuring discrimination. Sociological Methods and Research, 12(30), 323–343.Google Scholar
  47. Kaufmann, D., Kraay, A., & Mastruzzi, M. (2008). Governance matters VII: Aggregate and individual governance indicators, 1996–2007. World Bank policy research working paper No. 4654.Google Scholar
  48. Kaufmann, D., Kraay, A. & Mastruzzi, M. (2009). Governance matters VIII: Aggregate and individual governance indicators, 1996–2008. World Bank policy research working paper No. 4978. SSRN: https://ssrn.com/abstract=1424591.
  49. Kelley, J. (2016). Human gains and losses from global warming: Satisfaction with the climate in the USA, winter and summer, north and south. Social Indicators Research, 131(1), 345–366. doi: 10.1007/s11205-016-1251.Google Scholar
  50. Kelley, J., & Evans, M. D. R. (1995). Class and class conflict in six Western nations. American Sociological Review, 60(2), 157–178.Google Scholar
  51. Kelley, J. & Evans, M. D. R. (2013). Inequality, happiness, socioeconomic development, and institutional regime. Invited lecture, Kozminski Unversity, Warsaw, Poland.Google Scholar
  52. Kelley, J., & Evans, M. D. R. (2017a). Societal income inequality and individual subjective well-being: Results from 68 Societies and over 200,000 Individuals, 1981–2008. Social Science Research, 62(February), 1–23.Google Scholar
  53. Kelley, J., & Evans, M. D. R. (2017b). The new income inequality and well-being paradigm. Social Science Research, 62(February), 39–74.Google Scholar
  54. Kelley, J., Evans, M. D. R., Lowman, J., & Lykes, V. (2017). Group-mean-centering independent variables in multilevel models is dangerous. Quality and Quantity, 51(1), 261–283.Google Scholar
  55. Kenworthy, L. (2017). Income inequality probably has had little or no effect on subjective well-being. Social Science Research, 62(February), 36–38.Google Scholar
  56. Kim, J. S., & Frees, E. W. (2007). Multilevel modeling with correlated effects. Psychometrika, 72(4), 505–533.Google Scholar
  57. Koralewicz, J., & Zagorski, K. (2009). Living conditions and optimistic orientation of Poles. International Journal of Sociology, 39(4), 10–44.Google Scholar
  58. Landman, T., & Larizza, M. (2009). Inequality and human rights: Who controls what, when, and how. International Studies Quarterly, 53, 715–736.Google Scholar
  59. Lane, R. E. (2000). The loss of happiness in market democracies. New Haven: Yale University Press.Google Scholar
  60. Lim, C., & Putnam, R. D. (2010). Religion, social networks, and subjective well-being. American Sociological Review, 75, 914–933.Google Scholar
  61. Macunovich, D. J. (2011). A note on inequality aversion across countries, using two new measures. IZA working paper 5734. Bonn: Forschungsinstitut zur Zukunft der Arbeit.Google Scholar
  62. Ng, Y. K. (1997). A case for happiness, cardinalism, and interpersonal comparability. The Economic Journal, 107(445), 1848–1858.Google Scholar
  63. Nielsen, F. (2017). Inequality and inequity. Social Science Research, 62(February), 29–35.Google Scholar
  64. Nielsen, F., & Alderson, A. S. (1995). Income inequality, development, and dualism: Results from an unbalanced cross-national panel. American Sociological Review, 60(5), 674–701.Google Scholar
  65. O’Connell, M. (2004). Fairly satisfied: Economic equality, wealth and satisfaction. Journal of Economic Psychology, 25, 297–305.Google Scholar
  66. OECD. (2006). Gini index in glossary of statistical terms. http://stats.oecd.org/glossary/detail.asp?ID=4842. Accessed June 16, (2017).
  67. OECD. (2011). Divided we stand: Why Inequality keeps rising. OECD www.oecd.org/els/social/inequality. Accessed June 16, 2017.
  68. OECD. (2015). How’s life? Measuring well-being. OECD: http://www.oecd.org/statistics/how-s-life-23089679.htm. Accessed June 16, 2017.
  69. Oishi, S., Kesbir, S., & Diener, E. (2011). Income inequality and happiness. Psychological Science, 22(9), 1095–1100.Google Scholar
  70. Oshio, T., & Kobayashi, M. (2011). Area-level income inequality and individual happiness: Evidence from Japan. Journal of Happiness Studies, 12(4), 633–649.Google Scholar
  71. Pearl, J. (Ed.). (2009). Simpson’s paradox, confounding and collapsibility. In Causality (2nd ed., pp. 173–200). New York: Cambridge University Press.Google Scholar
  72. Piketty, T. (2014). Capital in the twenty-first century. Boston: Harvard University Press.Google Scholar
  73. Radcliff, B. (2001). Politics, markets, and life satisfaction: The political economy of human happiness. American Political Science Review, 95, 939–952.Google Scholar
  74. Rojas, M., & Veenhoven, R. (2013). Contentment and affect in the estimation of happiness. Social Indicators Research, 110, 415–431.Google Scholar
  75. Ross, C. E., & van Willigen, M. (1997). Education and the subjective quality of life. Journal of Health and Social Behavior, 38, 275–297.Google Scholar
  76. Rothstein, B., & Holmberg, S. (2011). Correlates of corruption. Working paper series, The Quality of Government Institute, University of Gothenburg ISSN 1653-8919.Google Scholar
  77. Rozer, J., & Kraaykamp, G. (2013). Income inequality and subjective well-being: A cross-national study on the conditional effects of individual and national characteristics. Social Indicators Research, 113(3), 1009–1023.Google Scholar
  78. Sacks, D. W., Stevenson, B., & Wolfers, J. (2010). Subjective well-being, income, economic development and growth. NBER working paper 16441.Google Scholar
  79. Saez, E. (2012). Striking it richer: The evolution of top incomes in the United States (updated with 2009 and 2010 estimates). University of California, March 2 (2012).Google Scholar
  80. Schneider, S. M. (2012). Income inequality and its consequences for life satisfaction: What role do social cognitions play? Social Indicators Research, 106, 419–438.Google Scholar
  81. Schnittker, J. (2008). Diagnosing our national disease: Trends in income and happiness, 1973 to 2004. Social Psychology Quarterly, 71, 257–280.Google Scholar
  82. Schwabish, J., Smeeding, T., & Osberg, L. (2006). Income distribution and social expenditures: A cross-national perspective. In D. B. Papadimitriou (Ed.), The distributional effects of government spending and taxation (pp. 247–288). Northampton, MA: Edward Elgar Publishing.Google Scholar
  83. Schwarz, N., & Strack, F. (1999). Reports of subjective well-being: Judgmental processes and their methodological implications. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology (pp. 61–84). New York: Russell Sage Foundation.Google Scholar
  84. Seidl, C., Traub, S., & Morone, A. (2005). Relative deprivation, personal income satisfaction and average well-being under different income distribution. Research paper No. 2005/04, UN University and World Institute for Development Economics Research.Google Scholar
  85. Sen, A. (1973). On economic inequality. Oxford: Clarendon.Google Scholar
  86. Shmotkin, D. (1990). Subjective well-being as a function of age and gender. Social Indicators Research, 23, 201–230.Google Scholar
  87. Smith, A. (1776 [1937]). The wealth of nations. New York: The Modern Library.Google Scholar
  88. Star, R., & Maier, J. (2008). Faith and happiness. Review of Religious Research, 50, 120–125.Google Scholar
  89. Stevenson, B., & Wolfers, J. (2008). Economic growth and subjective well-being: Reassessing the Easterlin paradox. NBER working papers 14282: http://www.nber.org/papers/w14282.
  90. Stiglitz, J. E. (2012). The price of inequality: How Today’s divided society endangers our future. New York: W.W. Norton and Company.Google Scholar
  91. Stiglitz, J. E., Sen, A., & Fitoussi, J. P. (2010). Mismeasuring our lives: Why GDP doesn’t add up. New York: The New Press.Google Scholar
  92. Tamas, D. B., & Dunbar, R. I. M. (2013). Processing power limits social group size: Computational evidence for the cognitive costs of sociality. Proceedings of the Royal Society B. doi: 10.1098/rspb.2013.1151.Google Scholar
  93. Thin, N. (2012). Social happiness: Theory into policy and practice. Bristol: Policy Press.Google Scholar
  94. Treiman, D. J. (2009). Scale construction. In Q. Data (Ed.), Analysis (pp. 241–262). San Francisco: Jossey-Bass.Google Scholar
  95. van Praag, B. M. S. (2010). Well-being inequality and reference groups. Journal of Economic Inequality, 9, 111–127.Google Scholar
  96. Veenhoven, R. (1984). Conditions of happiness. Dordrecht: Reidel.Google Scholar
  97. Veenhoven, R. (1993). Happiness in nations: Subjective appreciation of life in fifty-six nations, 1946–1992. Rotterdam: Risbo.Google Scholar
  98. Veenhoven, R. (2008). Sociological theories of subjective well-being. In M. Eid & R. J. Larsen (Eds.), The science of subjective well-being (pp. 44–59). New York: Guilford Press.Google Scholar
  99. Veenhoven, R. (2015). Social conditions for human happiness: A review of research. International Journal of Psychology, 50, 379–391.Google Scholar
  100. Veenhoven, R., & Hagerty, M. (2006). Rising happiness in nations 1946–2004: A reply to Easterlin. Social Indicators Research, 79, 421–436.Google Scholar
  101. Verme, P. (2011). Life satisfaction and income inequality. Review of Income and Wealth, 57, 111–137.Google Scholar
  102. Welzel, C., & Inglehart, R. (2010). Agency, values, and well-being. Social Indicators Research, 97, 43–63.Google Scholar
  103. Wilkinson, R. G., & Pickett, K. E. (2009). Income inequality and social dysfunction. Annual Review of Sociology, 35, 493–511.Google Scholar
  104. World Bank. (2013). World development report 2013: Jobs. Washington, DC: World Bank.Google Scholar
  105. World Bank. (2014). Gini index in data . http://data.worldbank.org/indicator/SI.POV.GINI. Accessed January 5, 2014.
  106. Yang, Y. (2008). Social inequalities in happiness in the United States, 1972 to 2004: An age-period-cohort analysis. American Sociological Review, 73, 204–226.Google Scholar
  107. Zagorski, K. (2011). Income and happiness in time of post-communist modernization. Social Indicators Research, 104, 331–349.Google Scholar
  108. Zagorski, K., Evans, M. D. R., Kelley, J., & Piotrowska, K. (2014). Does national income inequality affect individuals’ quality of life in Europe? Inequality, happiness, finances, and health. Social Indicators Research, 117(3), 1089–1110.Google Scholar
  109. Zagorski, K., Kelley, J., & Evans, M. D. R. (2010). Economic development and happiness: Evidence from 32 nations. Polish Sociological Review, 2010, 3–20.Google Scholar

Copyright information

© Springer Science+Business Media B.V. 2017

Authors and Affiliations

  1. 1.University of NevadaRenoUSA
  2. 2.International Survey CenterRenoUSA
  3. 3.University of California, BerkeleyBerkeleyUSA
  4. 4.American Institutes for ResearchWashingtonUSA

Personalised recommendations

Cite article

Buy options