Life Satisfaction and Income Inequality

Verme, Paolo

关键词: BENCHMARK;    CAP;    COUNTRY DUMMIES;    COUNTRY LEVEL;    CROSS-COUNTRY DATA;   

DOI  :  10.1596/1813-9450-5574
RP-ID  :  WPS5574

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Do people care about income inequalityand does income inequality affect subjective well-being?Welfare theories can predict either a positive or a negativeimpact of income inequality on subjective well-being andempirical research has found evidence on a positive,negative or non significant relation. This paper attempts todetermine some of the possible causes of such empiricalheterogeneity. Using a very large sample of world citizens,the author tests the consistency of income inequality inpredicting life satisfaction. The analysis finds that incomeinequality has a negative and significant effect on lifesatisfaction. This result is robust to changes in regressorsand estimation choices and also persists across differentincome groups and across different types of countries.However, this relation is easily obscured or reversed bymulticollinearity generated by the use of country and yearfixed effects. This is particularly true if the number ofdata points for inequality is small, which is a commonfeature of cross-country or longitudinal studies.