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Inequality and happiness: When perceived social mobility and economic reality do not match

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  • Bjørnskov, Christian
  • Dreher, Axel
  • Fischer, Justina A.V.
  • Schnellenbach, Jan
  • Gehring, Kai

Abstract

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 (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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 91 (2013)
Issue (Month): C ()
Pages: 75-92

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Handle: RePEc:eee:jeborg:v:91:y:2013:i:c:p:75-92

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Keywords: Happiness; Life satisfaction; Subjective well-being; Inequality; Income distribution; Redistribution; Political ideology; Justice; Fairness; World Values Survey;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Inequality and happiness: When perceived social mobility and economic reality do not match
    by maximorossi in NEP-LTV blog on 2010-12-21 13:54:59
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Cited by:
  1. Lars Feld & Jan Schnellenbach, 2014. "Political institutions and income (re-)distribution: evidence from developed economies," Public Choice, Springer, Springer, vol. 159(3), pages 435-455, June.
  2. Fischer, Justina A.V. & Torgler, Benno, 2011. "Do Positional Concerns Destroy Social Capital: Evidence from 26 Countries," MPRA Paper 28650, University Library of Munich, Germany.
  3. Andrew E. Clark & Conchita D'Ambrosio, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," PSE Working Papers halshs-00967938, HAL.
  4. Bjornskov, Christian & Dreher, Axel & Fischer, Justina AV & Schnellenbach, Jan, 2010. "Inequality and happiness: When perceived social mobility and economic reality do not match," MPRA Paper 25826, University Library of Munich, Germany.
  5. Jesper Rözer & Gerbert Kraaykamp, 2013. "Income Inequality and Subjective Well-being: A Cross-National Study on the Conditional Effects of Individual and National Characteristics," Social Indicators Research, Springer, Springer, vol. 113(3), pages 1009-1023, September.
  6. Engelhardt, Carina & Wagener, Andreas, 2014. "Biased Perceptions of Income Inequality and Redistribution," Hannover Economic Papers (HEP), Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät dp-526, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  7. Schnellenbach, Jan & Schubert, Christian, 2014. "Behavioral public choice: A survey," Freiburg Discussion Papers on Constitutional Economics 14/03, Walter Eucken Institut e.V..
  8. Christoph Schinke, 2014. "Government Ideology, Globalization, and Top Income Shares in OECD Countries," Ifo Working Paper Series Ifo Working Paper No. 181, Ifo Institute for Economic Research at the University of Munich.
  9. Eiji Yamamura, 2014. "Comparing the influence of conflict on the perceptions of rich and poor: testing the hypothesis of Acemoglu and Robinson," ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 0911, Institute of Social and Economic Research, Osaka University.
  10. Gehring, Kai, 2013. "Who Benefits from Economic Freedom? Unraveling the Effect of Economic Freedom on Subjective Well-Being," World Development, Elsevier, Elsevier, vol. 50(C), pages 74-90.

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