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The association between perceived income inequality and subjective well-being: Evidence from a social survey in Japan

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  • Oshio, Takashi
  • Urakawa, Kunio
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    Abstract

    Previous studies have shown that income inequality in society is negatively associated with individuals’ subjective well-being (SWB), such as their perceived happiness and self-rated health (SRH). However, it is not realistic to assume that individuals have precise information about actual income distribution measured by the Gini coefficient or other statistical measures. In the current study, we examined how perceived income inequality, rather than actual inequality, was associated with SWB, using cross-sectional data collected from a nationwide, Internet survey conducted in Japan (N = 10,432). We also examined how this association was confounded by individuals’ objective and subjective income status, considering the possibility that individuals with lower income status are more inclined to both perceive income inequality and feel unhappy/unhealthy. In our analysis, we focused on the perception of a widening income inequality (as perceived income inequality), perceived happiness and SRH (as SWB), and household income and living standards compared with one year ago and compared with others (as income status). We also controlled for personality traits. We obtained three key findings: (1) perceived income inequality was negatively associated with SWB; (2) both perceived income inequality and SWB were associated with income status; and (3) the association between perceived income inequality and SWB was attenuated after controlling for income status, but not fully for perceived happiness. These findings suggest that perceived income inequality, which links actual income inequality to SWB, should be further studied.

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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/25409/1/DP579.pdf
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    Bibliographic Info

    Paper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series CIS Discussion paper series with number 579.

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    Length: 27 p.
    Date of creation: Jan 2013
    Date of revision:
    Handle: RePEc:hit:cisdps:579

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    Keywords: income status; perceived income inequality; personality traits; self-rated health; subjective well-being;

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    References

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    1. Alberto Alesina & Rafael Di Tella & Robert MacCulloch, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," Harvard Institute of Economic Research Working Papers 1938, Harvard - Institute of Economic Research.
    2. Clark, Andrew E. & Oswald, Andrew J., 1994. "Satisfaction and comparison income," CEPREMAP Working Papers (Couverture Orange) 9408, CEPREMAP.
    3. Christian Grund & Dirk Sliwka, 2007. "Reference-Dependent Preferences and the Impact of Wage Increases on Job Satisfaction: Theory and Evidence," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 313-335, June.
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    12. David G. Blanchflower & Andrew J. Oswald, 2000. "Well-Being Over Time in Britain and the USA," NBER Working Papers 7487, National Bureau of Economic Research, Inc.
    13. Bowling, Ann & Stafford, Mai, 2007. "How do objective and subjective assessments of neighbourhood influence social and physical functioning in older age? Findings from a British survey of ageing," Social Science & Medicine, Elsevier, vol. 64(12), pages 2533-2549, June.
    14. Ana Butkovic & Irma Brkovic & Denis Bratko, 2012. "Predicting Well-Being From Personality in Adolescents and Older Adults," Journal of Happiness Studies, Springer, vol. 13(3), pages 455-467, June.
    15. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    16. Udo Ebert & Heinz Welsch, 2009. "How Do Europeans Evaluate Income Distributions? An Assessment Based On Happiness Surveys," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 803-819, 09.
    17. Clark, Andrew E., 1999. "Are wages habit-forming? evidence from micro data," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 179-200, June.
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