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Affluence, Inequality and Satisfaction with Democracy1 Armin Schäfer 1. Democracy after the Great U-Turn Not too long ago, Muller (1988) found a mutually beneficial relationship between democracy and egalitarian income distribution. Countries that had been ruled democratically for a long time tended to be more egalitarian; and more equality, in turn, stabilized democracy. However, the data he used covered in large part the third quarter of the 20th century – a period that has been characterized as the ‘golden age’ (Hobsbawm 1995). During this time, most industrial democracies grew not only more affluent but also became more egalitarian (Judt 2007: ch. 10-11). However, since the late 1970s and early 1980s, this trend towards equality has been reversed. First in Anglo-Saxon, then in other advanced democracies, incomes began to grow apart (Atkinson/Piketty 2007; Brandolini/Smeeding 2008). According to the OECD, most member countries have witnessed an increase in inequality between the mid-1980s and today (OECD 2008). In light of these developments, Alderson and Nielsen (2002) speak of the ‘great U-turn’ of income inequality. For the same period, studies show an erosion of support for core institutions of democracy such as parliaments, government, parties, and politicians (Dalton 2004). In parallel to the reversal in income distribution, a U-turn in turnout in parliamentary elections took place. Until the mid-1970s, turnout was rising in most advanced democracies. Since then, however, it has been declining in a majority of countries (IDEA 2004). Low turnout is ‘taken to be the most common symptom of democratic ill health,’ as Norris (2002: 6) notes. Given the coincidence of rising inequality and signs of democratic disaffection, we can ask whether and how these are linked. In this chapter, we follow up on recent studies that demonstrate a negative impact of income inequality on satisfaction with democracy. To do so, this chapter inquires which factors explain differences in satisfaction with the way democracy works in 25 European countries in the mid-2000s. Section 2 discusses what the dependent variable measures. How content people are with the way democracy works in their country does not denote

1 I would like to thank Silke I. Keil, Oscar W. Gabriel, and Juan Fernandez for many helpful comments.

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agreement or disagreement with the principle of democratic rule. Rather, it measures the level of support for the way a democratic regime works in practice (Linde/Ekman 2003). The third section recapitulates existing research on democracy satisfaction and, more generally, the impact of inequality on democracy. The first empirical section demonstrates that trust in government, parliament and politicians generates higher levels of satisfaction, as does a positive view of the state of the economy, of education and of health care. Higher incomes also lead to more satisfaction with democracy. In section five, results of a multilevel regression analysis will be presented. At the individual level, socioeconomic resources, political interest and satisfaction with political outcomes increase, while being unemployed and having voted for an opposition party diminish democracy satisfaction. At the macro level, there is a split between countries in Western and Eastern Europe. Citizens in the West are far more satisfied on average with the way democracy works than in the East. Democracy satisfaction is linked to the level of development. The richer a country, the more satisfied its citizens. Within the group of affluent West European states, however, satisfaction with democratic practice is highest in egalitarian societies. In fact, for the 17 West European countries, income inequality is the most powerful explanatory variable. Rising income inequality, we can conclude, breeds discontent with the performance of the political regime. Section 6 summarizes the findings and concludes. 2. Elements of support for democracy Most research on satisfaction with political regimes takes Easton’s (1975: 436-437) distinction between ‘diffuse’ and ‘specific support’ as a starting point, as the basic intuition still seems valid: a critical view of a particular government, distrust in politicians, or the rejection of certain policies need not translate into disenchantment with democracy as a principle or to a loss of confidence in the regime. While specific support may fluctuate a great deal, diffuse support might be much more stable. Despite this intuitive appeal, the dichotomous distinction is not fine-grained enough. Now, most researchers make use of more nuanced distinctions. Norris (1999b: 10-11) draws a useful continuum between diffuse and specific support composed of five elements: at the most general level, citizens can support or identify with the political community they live in. This kind of support depends on the degree to which citizens share a common identity and accept each other as equals. In most advanced democracies, identification with the political community is high, although in Belgium, Spain or Canada, this need not be the case. The next level refers to support

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for democracy as a form of government. In terms of the stability of democracy, this kind of support is essential. People may passionately dislike certain policies or oppose the present government; as long as they hold on to the belief that democracy is the best way to throw the rascals out, this does not put regime stability in question. Surveys show that an overwhelming number of citizens in Western Europe, and a high number in Eastern Europe support democracy as a form of government (Klingemann 1999: 45; Fuchs/Guidorossi/Svensson 1995: 349). The third level refers to regime performance or satisfaction with the way democracy actually functions. This notion taps what citizens think about the way democracy works in practice. There can be a substantial gap between support for democracy as a principle and the view on real existing democracy. While regime support at this level is lower than at the second level, there are few signs of generally declining satisfaction with democracy (Gabriel 2008: 192). Government, parliament, parties, the executive and the legal system are at the center of the fourth level of support. Some of these regime institutions have suffered from a marked loss of credibility during the last decades (Putnam/Pharr/Dalton 2000: 21).2 More recent analyses paint less grim a picture. Gabriel (2008: 196) shows that trust in parliaments differs across European regions and has grown apart since the early 1990s. Finally, there is support for political actors, which refers to trust in politicians or satisfaction with particular leaders. Having analyzed trends in 14 countries over roughly three decades, Dalton (1999: 63) finds ‘clear evidence of a general erosion in support for politicians in most advanced industrial democracies.’ Any encompassing discussion of support for democracy should take all five levels into account. However, the European Social Survey (ESS) does not include questions on the first two levels. Therefore, the ambition in this chapter is more modest. We will focus on the third level, that is, on satisfaction with the way democracy works. The following analysis seeks to reveal the ingredients of democracy satisfaction and, in particular, how income inequality affects the evaluation of regime performance. Even though we subsequently focus on one level, the analyses of this chapter nonetheless have more general implications. Klingemann (1999: 55-56) finds that satisfaction with democratic practice goes along with higher levels of support for democracy as an ideal. Thus, persistent dissatisfaction with the way democracy works could eventually erode support for democracy as a form of government.

2 For a discussion of the determinants of political trust see Zmerli in this volume.

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3. Inequality, political engagement and satisfaction with democracy Democracy is built upon the assumption of intrinsic equality (Dahl 1989: 85). We believe adult citizens to be the best judges of their own interests, competent to decide for themselves and therefore capable of selecting political leaders according to their own preferences. Even if we contend that people empirically differ in their abilities, we nonetheless reject as paternalistic the idea that others should decide or vote for them. Democracy is a method competent individuals employ to temporarily entrust leaders to take collective decisions in the face of disagreement. These decisions will be more readily accepted by those opposed to them if they are based on a fair procedure that ensures equal consideration of interests (Benn 1997). In the words of Walzer (1983: 304):

‘Democracy puts a premium on speech, persuasion, rhetorical skill. Ideally, the citizen who makes the most persuasive argument – that is, the argument that actually persuades the largest number of citizens – gets his way. But he can’t use force, or pull rank, or distribute money; he must talk about the issues at hand; and all the other citizens must talk, too, or at least have a chance to talk. […] Equally important is what we might call the rule of reason. Citizens come into the forum with nothing but their arguments. All non-political goods have to be deposited outside: weapons and wallets, titles and degrees.’

Conceptually, therefore, democracy is inextricably linked to the ideal of political equality. In reality, however, democracies live up to this ideal to a very different degree. Recent research suggests that the gap between democratic ideal and reality is largest in unequal countries. Cross-national comparisons show that income inequality depresses interest in politics, the willingness to discuss politics or to cast a vote (Solt 2008).3 In particular, this last point has received considerable attention. Everything else being equal, turnout is lower in unequal countries (Lister 2007) and in US states with higher income inequality (Galbraith/Hale 2008) – and low turnout always implies unequal participation (Kohler 2006):

‘As inequality goes up, so do the odds of abstention from electoral participation. These effects are unambiguous, and the inference does not depend on what kind of inequality we consider. Moving from the most equal countries in our sample (Sweden and Finland) to the most unequal (the United States) means increasing the odds of abstention

3 For a different view see Brady (2004).

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by about 14 percent: while the probability of abstention is only about 12 percent in the most equal country, it is roughly 26 percent in the country with the most unequal distribution’ (Anderson/Beramendi 2008: 295).

Looking more narrowly at studies that focus on satisfaction with democratic practice, few of these investigate the impact of income distribution. Most studies either focus on individual factors or on institutional features of the political regime. At the individual level, confidence in political institutions influences satisfaction with democracy positively (Zmerli/Newton/Montero 2007). Those who trust in parliaments, governments, and politicians are more satisfied with the way democracy works. The degree to which one trusts political institutions also depends on one’s support for the incumbent government. Therefore, a number of studies differentiate between those who voted for the government – ‘winner’ – and those who voted for the opposition – ‘loser.’ For West Germany, Gabriel (1989) sees only limited evidence that democracy satisfaction is linked to party-political support for the government. While Anderson et al. (2005: 42) also find but a small difference in the attitudes of winners and losers in Germany, there is a considerable gap in satisfaction with the way democracy works in most other countries. Multivariate analyses confirm that having voted for the opposition party significantly reduces democracy satisfaction. This effect is particularly pronounced in the new democracies of Eastern Europe (Anderson, et al. 2005). Other studies focus on macro-level factors to explain differences in democracy satisfaction. Tóka (1995) for example, demonstrates that lower satisfaction rates in Central and Eastern Europe are linked to the evaluation of a regime’s economic performance, that is to say growth, unemployment, and inflation. Similarly, Waldron-Moore (1999) finds that economic experiences explain satisfaction with democracy in six CEE countries better than alternative concepts. Focussing on Western Europe, Clarke, Dutt and Kornberg (1993) show that high unemployment and high inflation diminish democracy satisfaction. Poor economic outcomes, one could add, diminish democracy satisfaction in particular for those individuals who cling to socialist values that conflict with liberal democracy (Fuchs 1999). These attitudes are still relatively common in Eastern Europe. In a panel study of Leipzig citizens in the 1990s, however, Finkel, Humphries and Opp (2001) show that the explanatory power of socialist values declines over time. Finally, there are studies which inquire how micro-level and macro-level variables interact. For example, Anderson and Guilleroy (1997) show that the political regime moderates the effect of winning and losing. Losers in

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majoritarian democracy are less satisfied with the way democracy works than losers in consensus democracies.4 For 17 West European countries, Schäfer (2010) finds that people with higher socio-economic status are more satisfied with democracy and confide more strongly in parliaments and politicians. However, a more unequal distribution of incomes depresses both satisfaction and trust. This is in line with Anderson and Singer’s (2008) earlier analysis. They, too, trace the effect of income inequality on democracy satisfaction. Analyzing European Social Survey data from 2002, they find that citizens in more unequal countries tend to be less satisfied, and that this effect is particularly strong for ideologically left-leaning individuals. Drawing on this brief overview, a number of hypotheses can be formulated that relate to the individual, the macro level and to cross-level interactions: Individual-level hypotheses 1) Satisfaction with democracy increases with socio-economic resources (education and income). 2) ‘Losers’ are less satisfied with the way democracy works. 3) People satisfied with a regime’s output (the state of the economy, of health care, and education) have favourable attitudes towards democracy. Macro-level hypotheses 4) Respondents in Central and Eastern Europe are less satisfied with the way democracy works than those in the West. 5) Satisfaction with democracy rises with economic performance; in affluent counties and in countries with low unemployment, citizens are more satisfied. 6) The more unequal a country, the less satisfied its citizens with democracy. Cross-level hypotheses 7) Living in a consensus democracy lessens the effect of losing. 8) A country’s economic performance modifies the effect of individual socio-economic resources.

4 This is in line with Powell’s (2000) argument that governments stick closer to voters’ preferences in electoral systems with proportional representation.

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4. Political Institutions, Performance and Satisfaction with Democracy In the European Social Survey, respondents are invited to answer ‘how satisfied they are with the way democracy works in their country.’ The lowest possible score is zero (total dissatisfaction), the highest ten (complete satisfaction). Table 1 shows the average degree of satisfaction and the standard deviation for all countries.5 Citizens are most satisfied in Denmark, Switzerland and Finland; least satisfied in East Germany, Hungary and the Ukraine. Looking at these numbers, one cannot help but note that country differences are huge. On an eleven-point-scale, the most satisfied citizens score on average 5.2 points higher than the most discontent. Whereas 85 percent of Ukrainian respondents rate the way democracy works in their country five or lower, 85 percent of Danes choose five or higher. More generally, citizens in Eastern Europe are on average much less content than those in the West. - Table 1 here - What makes citizens satisfied or dissatisfied with democratic practice? We can get a first take on this multifaceted concept through a number of exploratory, bi-variate correlations. Table 2 shows how satisfaction with democracy relates not only to government satisfaction, but also to trust in parliament and politicians. Obviously, democracy’s esteem depends on the evaluation of these core institutions of parliamentary democracy, although satisfaction with government is central. This is in line with the finding that political trust triggers satisfaction with democracy (Zmerli/Newton/Montero 2007). In fact, it seems difficult to imagine that someone who has a high level of trust in parliament and government should nonetheless be dissatisfied with the way democracy works. This nexus is less obvious for indicators that focus on outcomes. However, Table 3 shows that citizens’ judgment of the state of the economy, of health care, and of education has a considerable impact on their view of democracy. Among the three indicators, economic performance is the most strongly correlated factor: the more positive someone sees the state of the economy, the higher this person’s regard for democracy. Citizens perceive it as a malfunctioning of democracy if the economy grows sluggishly, schools and universities have a poor record, and health care fails to meet their expectations. - Table 2 and Table 3 here - 5 All subsequent analyses are based on data from the second and third wave of the ESS. For most countries, we use data from the third wave in 2006. However, as the Czech Republic, Greece, Italy, and Luxembourg did not participate in this round, we rely on the second wave (2004) for these countries to maximize the overall number of countries included in the analyses.

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We can create an overall measure of trust in or satisfaction with political institutions and performance indicators by calculating the mean of the respective items. The items ‘satisfaction with government,’ ‘trust in parliament or politicians,’ as well as ‘satisfaction with the state of the economy, of health care, and of education’ all range from zero, indicating extreme dissatisfaction and very low trust, to ten, which indicates the opposite. The second column in Table 4 lists the correlation of the measure of trust in political institutions with democracy satisfaction for each country. In general, confidence in political institutions goes along with satisfaction with democracy. In each country, these variables are highly correlated, although the magnitude differs. In East Germany, Finland and Slovenia, the relationship is particularly strong, while it is least pronounced in Greece and the Ukraine. Turning to the combined performance indicator in the third column of Table 4, the same picture emerges. The more positive respondents evaluate the performance of their respective country, the more satisfied they are with democracy. However, there are notable differences between countries. The relationship is closest in Estonia and East Germany, loosest in Denmark, Spain, and Sweden. - Table 4 and Table 5 here - So far, we have looked at ‘sociotropic’ items that concern political institutions or general welfare. In contrast, people also support democracy because they personally benefit or do well. If we take household income and the degree to which people say they manage to live comfortably with it as indicators of individual concerns, we see that higher income and a lack of economic need are positively associated with democracy satisfaction (Table 5). Not surprisingly, people with higher incomes also tend to cope better with these. In general, these correlations are weaker than the measures of political institutions or of performance. Finally, whether people vote and who they have voted for affects their perspective on democracy. A guarded view on democratic practice makes voting more unlikely (Grönlund/Setälä 2007). Hence, nonvoters can be expected to be less satisfied with democracy in their county. Among voters, we can distinguish respondents having voted for one of the parties in government and those who voted for opposition parties, thus differentiating between ‘winners’ and ‘losers.’ As Anderson et al. (2005) argue, ‘losers’ consent’ is crucial for maintaining support for democracy. The upper part of Table 6 shows that voters and winners have more positive a view on the way democracy works. The same pattern holds, except for very few cases, if we disaggregate the data to the country level (graph 1). First, voters assess

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democracy more positively than non-voters in all countries, although the magnitude differs (Fuchs/Guidorossi/Svensson 1995: 345). While both groups are separated by more than one point in West Germany and in Sweden, the difference is small in Spain, Greece, the Ukraine or France. Second, winners generally see democracy functioning better than those who opted for an opposition party. Only in the Ukraine and Slovakia is this pattern reversed. The gap is substantial in East Germany, Italy, France and Hungary, whereas there is only a minor difference in Belgium, Finland and the Netherlands. - Graph 1 here - The lower part of Table 6 shows how voters and nonvoters as well as winners and losers differ in their satisfaction with government. Three things are worth noting. First, satisfaction with government is lower than the average satisfaction with democracy. Second, voters are significantly more satisfied with government than those who did not vote. Third, winners are clearly more content with government than losers. The difference between winners and losers is larger than with regard to democracy satisfaction. Hence while the appraisal of regime performance is less affected by opposition to the government than is support for regime institutions, it is still negatively affected. Overall, the descriptive statistics in this section confirm the individual-level hypotheses. - Table 6 here - 5. Affluence, Inequality and Satisfaction with Democracy The 25 countries in this study differ markedly in the degree to which citizens are satisfied with the way democracy functions in their respective country (Table 1). We have seen in the last section that there are some common trends across all countries. high levels of trust in political institutions, a positive view on the state of the economy, of education and health care as well as higher household income are all positively correlated with democracy satisfaction. Besides these common trends, it is worth knowing how social and economic structures account for differences in the level of satisfaction across European societies. What makes Danes, Swiss and Finns so much more content with democracy than East Germans, Hungarians and Ukrainians? As satisfaction with democracy is unevenly distributed across individuals as well as countries, we would like to understand what factors determine these differences. Given the variation in mean national satisfaction with

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democracy, it seems plausible that common experiences shape individuals’ attitudes. Hence, we cannot assume that observations within countries are independent of each other. One way to assess how much variance can be explained at the individual and at the macro level is to run an ‘empty model,’ which splits the variance into its components. Based on this, we can calculate the ‘intraclass correlation’ (ICC), which is the proportion of variance of the total variance explained at the macro level. In this case, the ICC is 0.156, saying that roughly 16 percent of the total variance can maximally be explained at the country level. Given this relatively high value, ignoring the nesting of the data would produce distorted results (Bickel 2007: ch. 2).6 Therefore, all subsequent models are multilevel analyses. 5.1 Micro-level explanations of democracy satisfaction In a first step, we again look at a number of micro-level variables. As hypotheses 1 to 3 suggest, the focus is on socio-economic resources, distance to the government, and satisfaction with political output, although age, gender, ideological self-placement and religiosity are also included. Model 1 in Table 7 includes individual level variables, mainly concerning demographics. Women are significantly less satisfied with democracy than men, whereas satisfaction mounts with religiosity. The effect of age and political ideology is non-linear. Everything else being equal, respondents on the far right are 1 point more satisfied than those decidedly left. As with ideology, there is also a non-linear effect of age. Young and old people are more satisfied with democracy than those in the middle of their life. As hypothesis 1 assumed, satisfaction with democracy is higher for people with higher education and incomes. Substantively this means that – on an eleven-point scale – low income people are 1 point less satisfied than those with the highest incomes and those least educated 0.8 points less content with democracy than the most educated. Following Snijders and Bosker (1999: 102-103), we can calculate the explained proportion of the variance at each level to get an idea of the model fit. At Level 1, the R² is calculated by subtracting from one the ratio of the sum of a model’s variance components to the total variance of the empty model. The overall explanatory power of the first model is rather small. It only accounts for 3.7% of the variance at this level. 6 Another way to look at this is to run an OLS regression on satisfaction with democracy that includes all level I variables. When the residuals from this analysis are used as the dependent variable in a one-way analysis of variance (ANOVA) in which country is the independent variable, we see that the residuals are not uncorrelated but clustered (F=68.39; p<.000; df=24).

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In the next step, variables are included which refer to the input of the political system: political interest, voting behavior, political activism, and membership in trade unions and parties. The index of political activism is made up of seven forms of political engagement: working for a party or another organization, contacting politicians, wearing a badge, signing a petition, taking part in a demonstration, and boycotting products for political reasons. It ranges from zero for respondents who did not participate in any of these activities to seven for those who used all of them. Entering these variables does not affect the results of the previous model. The analysis confirms hypothesis 2: losers – those who voted for opposition parties – are less satisfied with democracy than winners. Being interested in politics leads to higher levels of democracy satisfaction. In contrast, political activists, who make use of non-conventional forms of participation, are less satisfied with democracy. They might be the ‘critical citizens’ who understand politics well but are uneasy about party politics. While they are by no means detached from politics, misgivings of democratic practice motivate them (Norris 1999a). Finally, party members are more satisfied with democracy than non-members. But this does not hold for trade union members, who are less satisfied than other respondents. The overall model fit remains modest, though it increases to 6%. Finally, Model 3 includes two variables which can be seen to account for outcomes of the political system. First, we look at unemployed respondents. They are less content with the functioning of democracy than those not unemployed, even if we check for factors such as education, income, or political interest. The substantive effect is modest, though. Quite the contrary holds for the performance indicator. As in Section 4, this indicator combines how people evaluate the state of the economy, of education, and of health care in their country. If a person altered her or his view on the performance from totally negative to totally positive, this would increase that person’s democracy satisfaction by almost 6 points. Hence, this result strongly supports hypothesis 3. Due to the marked impact of the performance indicator, the model fit increases substantially. Model 3 explains 23.5% of level I-variance. - Table 7 und Table 8 here (vielleicht auf eine Doppelseite?) - 5.2 Macro-level variables and cross-level interactions In this section, we add macro-level variables. The country ordering in Table 1 makes it readily apparent that people in Eastern Europe are less satisfied with democracy than people in the West. All CEE countries have below average scores, whereas most West European countries score above average – with

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the exceptions of France, Italy, and the UK. What is more, the most satisfied citizens seem to inhabit rich countries such as Switzerland, the Scandinavian countries, and Luxembourg.7 In Graph 2, mean satisfaction with democracy is plotted against GDP per capita. The emerging picture is clear. The richer a country, the more satisfied its citizens are on average.8 The importance of a country’s wealth is confirmed in a multivariate analysis. The first model in Table 8 simply includes three macro-level variables. Neither the unemployment rate nor income inequality reach statistical significance. Yet, the level of development measured as GDP per capita has a significant impact. Moving from the poorest to the richest country increases satisfaction with democracy by 2.9 points on an eleven-point scale. Accordingly, the economic performance of a country, as previous studies have shown, matters for democracy satisfaction. The more affluent a country, the more content with democracy its citizens are.9 In poor countries, in contrast, dissatisfaction is widespread. In the Ukraine, by far the poorest country in the sample, people are markedly disenchanted with the way democracy works in their country. Surely, disappointment among the supporters of the ‘Orange Revolution’ in part accounts for this. Yet, despite specific national factors, the pattern holds across the entire sample of 25 countries. At first sight, the results of Model 4 seem to disconfirm hypothesis 6 that income inequality affects democracy satisfaction. However, this conclusion may be premature as Graph 3 indicates. While there is no discernible correlation between inequality and satisfaction in the CEE countries, this does not hold true for Western Europe. In the latter group of countries, income inequality correlates quite strongly with mean democracy satisfaction. In line with the hypothesis, this suggests that in more unequal countries, people are less satisfied with the way democracy works. While the level of development divides East and West, inequality matters for the way in which the performance of democracy is evaluated in the most affluent countries. Model 5 (Table 8) takes this pattern into account and includes not only a dummy variable for Western Europe, but also an interaction term of this variable with the Gini coefficient. While the level of development remains statistically significant, the dummy variable confirms that Western and

7 Greece, which displays a relatively high level of democracy satisfaction, is an exception. One could speculate that the Greeks feel particularly attached to democracy as it is their ‘invention.’ 8 The correlation is even stronger without Luxembourg, which is an outlier in terms of wealth. 9 In contrast, the unemployment rate does not seem to matter. However, see the discussion below.

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Eastern Europe are worlds apart in terms of democracy satisfaction. In the West, inequality affects the evaluation of democracy negatively. Almost 3 points separate the most unequal (Portugal) from the most equal country (Denmark), even after controlling for the level of development. In this model, the constitutive measure of income inequality turns out to be significant as well. As we have included an interaction term, this variable now refers to the Eastern European countries only. Quite counter-intuitively, the result suggests that in more unequal CEE countries, democratic practice is rated higher – though the substantial effect is smaller than in the West. However, two data problems cast doubt on this finding. First, data for some countries is from the mid to late 1990s. Since especially CEE countries have been developing rapidly, this data may be less accurate than those of Western Europe. Second, the most egalitarian country in the sample is East Germany, which is at the same time characterized by a very low level of democracy satisfaction. At first sight, this contradicts the idea that more equality boosts satisfaction. However, most likely is that East German citizens do compare with their fellow citizens in the West. If they do so, they will perceive their country as much less egalitarian because the overall Gini coefficient for Germany is substantially higher and has been rising steadily over recent years. The analysis so far suggests that there are three divides in Europe which explain differences in the level of democracy satisfaction. The first one separates the West from CEE countries. The second one divides poor and rich countries (there is, of course, a great deal of overlap between the first and the second divide). A high level of development goes along with higher rates of satisfaction. The third divide affects Western European countries only. In this group of affluent societies, high levels of income inequality lead to a lower approval of the way democracy works. Hence, in rich but egalitarian countries people are most content with democracy. These findings remain robust if we include two variables which focus on the input-side of democracy, the effective number of parties and a dummy variable for consensus democracy (Model 6). Neither variable has a significant impact. The indicator of the explained variance is again calculated according to Snijders and Bosker’s (1999: 103) suggestion. Including these seven variables into the analysis helps to explain two thirds of the variance at level II.10

10 Remember, however, that only 16 percent of the overall variance can maximally be explained at the macro level. Hence, the seemingly impressive R² at level II merely indicates that the macro variables capture differences in the level of democracy satisfaction between the countries well. Yet the bulk of the variance occurs at the individual level.

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In the next step, we integrate all individual level and macro-level variables in Model 7. This full model confirms the results of previous analyses. With 34 and 68% of the variance explained at level I and level II respectively, the overall model fit is good. Finally, the effect of some variables could be context-sensitive. Therefore, Model 8 includes two cross-level interactions. The first one gauges whether the effect of having voted for an opposition party is affected by the type of democracy. Since the two constitutive variables are both dichotomous variables, the interpretation is straightforward. The variable ‘loser’ taps the effect of losing in majoritarian systems. In these countries, losers are less satisfied with democracy than winners. In consensus democracies, by contrast, winning or losing does not make a difference. The second interaction tests how the effect of being unemployed is moderated by the unemployment rate of a country. In this case, the interpretation is not straightforward (Braumoeller 2004; Brambor/Clark/Golder 2006). Therefore, Graph 4 visualizes the marginal effect of being unemployed by the unemployment rate of a country. We can see that individual unemployment triggers dissatisfaction with democracy to very different degrees depending on the context. It is small in countries with a low unemployment rate but increases as the latter rises. Being unemployed means a different thing in countries with wide-spread unemployment where an easy re-entry into the labour market is presumably difficult. In these countries, individual unemployment significantly reduces satisfaction with democracy.11 - Graph 4 and Graph 5 here - Having gone through the analyses, we can now assess the explanatory power of the variables. Graph 5 depicts standardized coefficients for all significant variables of Model 7 in absolute values. Income inequality in West European countries has the strongest overall impact, followed by the dummy variable separating East and West. The most powerful individual-level variable is the performance indicator measuring how people see the economy, education and health care. Affluence (GDP per capita) comes next. Most other variables have a relatively small substantive impact. These results convey the message that people want democracy to deliver cherished outcomes. Citizens in countries that achieve both a high level of development and an egalitarian distribution of incomes are most satisfied with the way democracy works. 6. Conclusions 11 In further analyses, not reproduced here, we have tested whether income inequality or a country’s level of development moderate the effect of personal income. However, neither test produced significant results.

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In this chapter, we have looked at factors that make citizens content with the way democracy works in their country. Individual resources such as higher household income and education lead to higher rates of democracy satisfaction. In contrast, personal hardship such as unemployment creates discontent. Those who support the government and who are satisfied with outcomes also approve more strongly of democracy’s functioning, whereas ‘losers’ are less happy with democratic practice in their respective country. Both losing and being unemployed are context-sensitive. The effect of being unemployed is larger in countries with a high unemployment rate. Likewise, losing only matters in majoritarian countries, where winning parties are able to implement more far-reaching changes that presumably run counter to losers’ interests. We have noted throughout the chapter, that satisfaction with democracy is not identical with support for democracy as an idea or as a way of government, since it is influenced not only by the approval of political institutions (government, parliament, politicians, and the legal system) and the performance of the economy, health care or education, but also by individual welfare. How content or discontent citizens are tells us something about their perception of a regime’s performance. Both input-oriented and output-oriented elements are important for this. Hence, people who are disappointed of the way democracy works need not be – and most often are not – against democracy in principle. They simply wish it worked better in their own country. Accordingly, low levels of democracy satisfaction are less alarming than widespread anti-democratic sentiment. Nonetheless, we should not take declining satisfaction lightly. If more and more people become convinced that the present democratic regime cannot deliver, that it is incapable of solving problems, or that it cares mainly about the well-off, citizens may turn away from democracy in disappointment. Inequality could spark off democratic distemper of this sort:

‘Greater economic inequality increasingly stacks the deck of democracy in favor of the richest citizens, and as a result, most everyone else is more likely to conclude that politics is simply not a game worth playing’ (Solt 2008: 58).

For the 17 West European countries analyzed in this chapter, this assessment seems valid. Differences in the level of democracy satisfaction result from differences in income inequality. Amongst this group of countries, which belong to the most affluent in the world, citizens are most content in egalitarian societies. Things are different though, in Central and Eastern Europe, which are much less affluent. It is the level of development that

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triggers satisfaction with democracy rather than equality. In the poorest European countries, an overwhelming majority of citizens are disappointed with regime performance. In the light of these results, European societies face difficult challenges. For Western Europe, the key towards higher democracy satisfaction seems to be a more egalitarian form of income distribution, while CEE countries must catch up economically with the West, while keeping inequality in check. However, few countries presently manage to achieve both goals. As we have noted in the introduction, most OECD countries have grown more unequal over time. Research that focuses on long-term developments indicates that the conditions that rendered high growth rates and more equality possible at the same time seem to no longer exist (Lutz 1984; Brenner 2006). Of course, people may also downgrade their expectations and thus align them to changed economic circumstances. Until this has happened, disenchantment with the functioning of democracy will presumably not disappear.

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turn. Income inequality trends in 16 OECD countries. In: American Journal of Sociology 107, 1244-1299.

Anderson, Christopher J./Pablo Beramendi, 2008: Income, Inequality, and Electoral Participation. In: Pablo Beramendi/Christopher J. Anderson (eds.), Democracy, Inequality, and Representation. A Comparative Perspective. New York: Russell Sage Foundation, 278-311.

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Table 1: Satisfaction with democracy in 25 European countries Mean

Standard deviation N

Denmark 7.5 1.9 1476 Switzerland 6.9 1.9 1765 Finland 6.8 1.9 1851 Norway 6.6 2.0 1729 Luxembourg 6.6 2.1 1503 Sweden 6.3 2.1 1863 Greece 6.2 2.2 2366 Netherlands 6.1 1.7 1833 Austria 6.0 2.3 2275 Ireland 5.9 2.1 1704 Spain 5.9 2.0 1800 Belgium 5.5 2.1 1776 West Germany 5.5 2.3 1831 Estonia 4.9 2.3 1350 UK 4.9 2.3 2270 Italy 4.8 2.2 1474 Slovakia 4.8 2.3 1702 France 4.7 2.3 1970 Slovenia 4.6 2.3 1378 Czech Republic 4.6 2.4 2860 Poland 4.4 2.3 1616 Portugal 4.2 2.1 2053 East Germany 4.1 2.4 1025 Hungary 3.5 2.5 1414 Ukraine 3.2 2.4 1724 All 5.0 2.4 44608

Source: ESS 2 & 3. Remarks: Data weighted by design weight.

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Table 2: Satisfaction with democracy and state institutions Satisfaction with Trust in

Democracy Government Parliament Govern- ment

0,59*** (43424)

Parliament 0,51*** (43579)

0,57*** (43659)

Politicians 0,47*** (43903)

0,56*** (43962)

0,70*** (44708)

Source: ESS 2 & 3. Remarks: Data weighted according to design and population. Explanations: Entries are Pearson’s Correlation Coefficients; ***= p<.001; numbers in parentheses = N. Table 3: Satisfaction with democracy and performance indicators

Satisfaction with Democracy Economy Education Economy 0,54***

(43798)

Education 0,40*** (42591)

0,40*** (43044)

Health care 0,41*** (44232)

0,44*** (44833)

0,50*** (43758)

Source: ESS 2 & 3. Remarks: Data weighted according to design and population. Explanations: Entries are Pearson’s Correlation Coefficients; *** = p<.001; numbers in parentheses = N.

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Table 4: Trust, performance and satisfaction with democracy Trust in political

institutions Satisfaction with

performance R² N R² N Austria .53*** (2116) .55*** (2142) Belgium .64*** (1733) .47*** (1733) Switzerland .54*** (1765) .47*** (1647) Czech Republic .56*** (2725) .55*** (2629) Denmark .55*** (1446) .47*** (1415) Estonia .60*** (1245) .62*** (1223) Spain .53*** (1674) .42*** (1663) Finland .66*** (1831) .52*** (1836) France .58*** (1920) .54*** (1938) UK .63*** (2227) .54*** (2152) East Germany .66*** (995) .61*** (958) Greece .49*** (2248) .56*** (2107) West Germany .57*** (1760) .53*** (1745) Hungary .64*** (1335) .59*** (1235) Ireland .58*** (1615) .50*** (1634) Italy .59*** (1375) .59*** (1378) Luxembourg .53*** (1303) .49*** (1314) Netherlands .61*** (1800) .51*** (1695) Norway .56*** (1713) .49*** (1706) Poland .49*** (1568) .47*** (1526) Portugal .63*** (1920) .52*** (1894) Sweden .60*** (1614) .46*** (1701) Slovenia .65*** (1294) .58*** (1276) Slovakia .55*** (1628) .56*** (1615) Ukraine .33*** (1601) .39*** (1544) Source: ESS 2 & 3. Remarks: Data weighted according to design, *** = p<.001.

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Table 5: Satisfaction with democracy and household income Satisfaction with democracy Household income Household income 0,23***

(44608)

Coping on household income

0,25*** (43925)

0,52*** (45972)

Source: ESS 2 & 3. Remarks: Data weighted according to design and population. Explanations: Entries are Pearson’s Correlation Coefficients; ***= p<.001; numbers in parentheses = N. Table 6: Gaps in satisfaction with democracy and government

Mean satisfaction with democracy F-value N

Voter 5.1 340*** 32407 Nonvoter 4.5 8745 Winner 5.5 630*** 12371 Loser 4.8 14611

mean satisfaction with government F-value N

Voter 3.9 208*** 32482 Nonvoter 3.5 8800 Winner 4.6 2108*** 13014 Loser 3.3 14084 Source: ESS 2 & 3; ***= p<.001.

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Table 7: Satisfaction with democracy – individual level variables Empty

model Model 1 Model 2 Model 3 Intercept 5.061*** 5.024*** 5.304*** 5.106*** (0.225) (0.208) (0.244) (0.252) Age -4.403*** -4.567*** -2.041* (1.130) (1.258) (0.996) Age² 5.026*** 4.908*** 1.995+ (1,165) (1.304) (1.026) Female -0.337*** -0.287*** -0.097* (0=no; 1=yes) (0.043) (0.040) (0.049) Education 0.849*** 0.771*** 0.516*** (0=low; 1=high) (0.099) (0.096) (0.077) Income 0.083*** 0.085*** 0.050* (0=low; 12=high) (0.020) (0.020) (0.020) Religiosity 0.497*** 0.503*** 0.216** (0=low; 1=high) (0.102) (0.093) (0.076) Lrscale 0.211*** 0.191*** 0.093* (0=left; 10=right) (0.065) (0.055) (0.042) Lrscale² -0.011*** -0.012** -0.005 (0.004) (0.004) (0.003) Interested in politics 0.354*** 0.319*** (0=no; 1=yes) (0.045) (0.032) Political activities -0.059* -0.030 (0=none; 7=7) (0.024) (0.021) Loser -0.598*** -0.338*** (0=no; 1=yes) (0.045) (0.097) Party member 0.352** 0.227* (0=no; 1=yes) (0.111) (0.093) Trade union member -0.098+ -0.047 (0=no; 1=yes) (0.058) (0.052) Unemployed -0.223* (0=no; 1=yes) (0.103) Performance indicator 0.647*** (0=low; 10=high) (0.024) Variance: Country intercept 0.897 0.898 0.856 0.871 Variance: Individual level 4.848 4.628 4.543 3.512 ICC 0.156 0.163 0.158 0.198 Deviance 99095 98190 97692 92003 R² (Level 1) 0.037 0.060 0.235 N (individuals) 22,409 22,409 22,409 22,409

Source: ESS 2 & 3, own calculation. Remarks: All continuous individual level variables are group-centered. + p<0.1, * p<0.05, ** p<0.01, *** p<0.001; standard errors in parentheses.

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Table 8: Satisfaction with democracy – macro-level variables and cross-level interactions Model 4 Model 5 Model 6 Model7 Model 8 Intercept 5.228*** 1.921*** 1.973*** 2.117*** 2.137*** (0.164) (0.504) (0.527) (0.528) (0.968) Political activities -0.029 -0.030** (0=none; 7=7) (0.021) (0,010) Loser -0.337*** -0.348*** (0=no; 1=yes) (0.097) (0.010) Party member 0.227* 0.230*** (0=no; 1=yes) (0.092) (0.055) Trade union member -0.045 -0.044 (0=no; 1=yes) (0.052) (0.035) Unemployed -0.222* -0.123+ (0=no; 1=yes) (0.102) (0.066) Satisfied with output 0,646*** 0,646*** (0=low; 10=high) (0,023) (0,008) Unemployment rate -0.026 -0.027 -0.025 -0.025 -0.022 (0.032) (0.025) (0.026) (0.027) (0.031) GDP per capita (logged) 1.141*** 1.370*** 1.290*** 1.332*** 1.334*** (0.190) (0.159) (0.159) (0.164) (0.328) Gini-coefficient -0.006 0.087*** 0.095** 0.094** 0.093* (0.036) (0.022) (0.032) (0.032) (0,039) Western Europe 6.267*** 6.018*** 5.915*** 5.883** (0.905) (1.038) (1.046) (1.750) West * Gini -0.212*** --0.200*** -0.199*** -0.198** (0.028) (0.031) (0.032) (0,054) Consensus democracy 0.155 0.038 0.022 (0.337) (0.338) 0.354 ENEP -0.062 -0.041 -0,042 (0.047) (0.047) (0.082) Loser * consens 0.039 (0.059) Unemployed * unempl. rate -0.038*** (0.011) Variance: Country intercept 0.523 0.274 0.291 0.302 0,286 Variance: Individual level 4.848 4.848 4.847 3.521 3,511 ICC 0.097 0.054 0.057 0.079 0,075 Deviance 99088 99077 99079 91993 92058 R² (Level 1) 0.065 0.108 0.105 0.334 0,339 R² (Level 2) 0.415 0.690 0.671 0.661 0,681 N (individuals) 22,409 22,409 22,409 22,409 22,409

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Source: ESS 2 & 3, own calculation. Remarks: The individual level variables used in Models 1 to 3 inclusive are not displayed for ease of presentation. Adding level II variables does not substantially alter the results of these models. All continuous individual level variables are group-centered; all continuous level II variables grand-mean centered; + p<0.1, * p<0.05, ** p<0.01, *** p<0.001; standard errors in parentheses.

Graph 1: Gap in democracy satisfaction across European countries

voter-nonvoter gapwinner-loser gap

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Graph 2: Affluence and satisfaction with democracy

Graph 3: Inequality and satisfaction with democracy

R² = 0,47

GDP per capita

y = -0.0135x + 4.4288 R² = 0.0005

y = -0.0533x + 2.9979 R² = 0.0153

Gini Coefficient

Western Europe (R²=.51)Eastern Europe (R²=.01)

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Graph 4: Marginal effect of being unemployed with 95% confidence interval

Remarks: This graph shows how the level I variable ‘unemployed’ is moderated by the level II variable ‘unemployment rate.’ With higher rates of unemployment, the negative effect of being individually unemployed increases.

Unemployment Rate

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Graph 5: Relative impact of standardized explanatory variables

Remarks: The length of the bars indicates how a one standard deviation change in an independent variable affects the dependent variable.

Impact on democracy satisfaction