Top Incomes and Subjective Well-being(Kelley and Evans 2016). On the other hand, income inequality may be perceived positively in the society if it is considered in the perspective

1

Top Incomes and Subjective Well-being

Michal Brzezinski

Faculty of Economic Sciences

University of Warsaw, Poland

e-mail: [email protected]

Preliminary version, 15.02.2017

Abstract

This paper contributes to the empirical literature on the link between income inequality and

subjective well-being (SWB). In particular, the paper estimates the relationship between income

inequality as measured by top income shares and SWB understood as self-rated life satisfaction

and happiness. Using top incomes data from the World Wealth and Income Database and SWB

data from the World Values Survey (waves 1-6), we estimate the relationship between top in-

comes and SWB for 25 countries observed between 1981 and 2012 (62 surveys and 70,000

respondents). The main result shows that in a full sample of countries there is a positive rela-

tionship between top 1% income shares and life satisfaction (but not between top income shares

and happiness). This relationship seems to be driven by a strong positive correlation found in

Asian and South American countries. On the other hand, it seems that there is no relationship

between top incomes and life satisfaction in Europe.

JEL Classification: D63, I3

Keywords: top incomes, subjective well-being, life satisfaction, happiness, income inequality,

World Wealth and Income Database, World Values Survey

mailto:[email protected]

2

1. Introduction

The relationship between income inequality and subjective well-being (SWB) has been studied

empirically in a number of papers published during the recent years (Alesina et al., 2004;

O'Connell, 2004; Rozer and Kraaykamp, 2013; Verme, 2011; Kelley and Evans, 2016; Burk-

hauser et al., 2016). Several economic and sociological theories postulate that income inequality

can have a negative impact on SWB, which has become a greater concern in the era of income

inequality growing in many rich Western countries. While most of the empirical papers study-

ing the link between inequality and SWB is based on inequality measures estimated from survey

data, the availability of top income shares constructed on the basis of tax records (Atkinson et

al. 2011) has brought new opportunities to the literature. Recently, Burkhauser et al. (2016)

have studied the relationship between inequality as measured by top income shares and life

evaluation and emotional well-being. They found that top income shares are significantly cor-

related with lower life evaluation and higher levels of negative emotional well-being, while that

there is no relationship with positive emotional well-being. Their study uses SWB data from

Gallup World Poll (GWP) for the relatively short period from 2006 to 2012. In this paper, we

extend the analysis of Burkhauser et al. (2016) by combining top income shares with SWB data

taken from the World Values Survey (WVS), which covers much longer time period. In case

of some countries, using the WVS data allows to study the relationship between top income

shares from the early 1980s until 2010s. The longer time perspective offered by the WVS data

covers much better the period of the main inequality growth in Western countries than the GWP

data. Using the WVS data allows also one to test whether the results of Burkhauser et al. (2016)

are not driven by the choice of short and recent time period of analysis.

3

2. Literature review

Theoretical considerations do not allow to specify the inequality-SWB link in an unambiguous

way. From the one point of view, income inequality and SWB can be negatively related if higher

income inequality is perceived as unfair inequality or if prospects of vertical mobility in a so-

ciety are limited (Alesina et al. 2004; Graham and Felton 2006). Similar effect holds if most

people make upward comparisons (comparing themselves to the richer individuals), which gen-

erates status anxiety leading to stress and unhappiness (the so-called status-anxiety hypothesis)

(Kelley and Evans 2016). On the other hand, income inequality may be perceived positively in

the society if it is considered in the perspective of possible gains to be achieved in the future

(the so-called tunnel effect, Hirschman 1973, or hope factor, Kelley and Evans 2016). Seen in

this light, income inequality could contribute positively to SWB. As the theory does not give

clear prediction about the overall net effect of income inequality on SWB must be estimated

empirically.

3. Data

We use historical time-series on top income shares held by top 10% and top 1% from the World

Wealth and Income Database (WID.world) (Alverado et al. 2017). The data about SWB come

from the World Values Survey (WVS). The WVS delivers two measures of SWB: a 10-point

life satisfaction index and 4-point happiness measure. We use both measures as happiness and

life satisfaction denote the same or similar dimensions of SWB. Although measures of well-

being are often divided into hedonic (happiness), cognitive (life satisfaction) and eudemonic

4

(meaning, flourishing, accomplishment), it is difficult disentangle hedonic from cognitive ele-

ments of well-being. Clark and Senik (2011) and Clark (2015) treat happiness and life satisfac-

tion as a common “hedonic” dimension of well-being and show that these measures are very

significantly correlated in practice.

In our regressions estimating the relationship between top income shares and SWB we

use several control variables, both on the micro (individual) and the macro (country) level. The

first group includes individual characteristics such as individual’s age, age-squared, a measure

of household incomes (scale of incomes), self-rated health, labour market status, marital status,

educational attainment, categorical variables measuring individual religiosity and respondent’s

number of children. All these individual characteristics are taken from the WVS data. On the

country level, we control for the country’s log real GDP level, economic growth rate, unem-

ployment rate, and inflation rate. All macroeconomic variables come from the World Develop-

ment Indicators. In all models, we include year dummies. Our preferred specification includes

also country fixed effects.

Combining top income shares with WVS data produces repeated cross-section data for

up to 25 countries observed between 1981 and 2012 (up to 62 surveys and 70,000 respondents).

4. Results and discussion

Tables 1 (life satisfaction) and 2 (happiness) show results for regression models without country

fixed effects. All regressions are estimated using the OLS with standard errors clustered at the

country and year level. We have also used the WVS sampling weights in all estimations. Results

from Tables 1-2, which contain results not accounting for country-specific effects, suggest that

the link between top income shares and SWB is either non-existent (life satisfaction) or weak

5

and negative (happiness and top 10% share). This is rather inconsistent with Burkhauser et al.

(2016), who using a similar model (without country fixed effects) found a negative relationship

between top 1% share and life evaluation. One possible explanation of this inconsistency is that

our sample contains, for several countries, a much longer time series of data. Indeed, if the

sample is restricted to the same period as used in Burkhauser et al. (2016) – that is 2006-2012

– the inconsistency disappears. Table 7 (models 3 and 6) shows a negative statistically signifi-

cant relationship between top income shares and life satisfaction, using the same specifications

(including both micro- and macro controls) as in Burkhauser et al. (2016). For happiness, we

observe a negative relationship in case of Top10 measure, but a weak and positive link in case

of Top1 index.

Tables 3-4 present results for our preferred specifications, which include a full set of

control variables, year dummies and country fixed effects. For life satisfaction (Table 3), we

can see a strong positive correlation with the Top1 measure (but no relationship with Top10

index). In case of happiness (Table 4), there is no SWB-top incomes link for Top1 index and

only a weak evidence for negative relationship with Top10 index. A positive relationship be-

tween Top1 index and life evaluation using specifications with country fixed effects was also

found in Burkhauser et al. (2016). Performing the analysis by sub-samples defined by conti-

nental country groups, Burkhauser et al. (2016) found that the positive relationship between top

income shares and life evaluation is driven by the effects associated with less-developed econ-

omies (Africa and South America, but also Australia and New Zealand). On the other hand, the

relationship for European countries was found to be negative and statistically significant (and

negative, but insignificant for North America and Asia). Sub-sample regression analysis with

country groups defined by continents for our sample is shown in Tables 5 (life satisfaction) and

6 (happiness). Contrary to Burkhauser et al. (2016) we do not find a negative link between top

income shares and life satisfaction in Europe. The positive correlation between Top1 index and

6

life satisfaction found in the full sample seems to be driven by strong effects for Asia, South

America and Africa). There is some evidence for negative relationship in North America. The

results for happiness are broadly similar.

5. Conclusions

This paper has studied the link between income inequality as measured by top income shares

and SWB (life satisfaction and happiness), using sample covering much longer time period than

previous analyses (especially Burkhauser et al. 2016). We have found that in our full sample of

countries and in the preferred specification there is a positive relationship between top 1% in-

come shares and life satisfaction (but not between top income shares and happiness). This rela-

tionship seems to be driven by a strong positive link between top 1% income share and life

satisfaction found in Asian and South American countries. It provides some evidence in favor

of the presence of the Hirschman’s tunnel effect in these countries. On the other hand, it seems

that there is no relationship between top incomes and life satisfaction in Europe.

7

References

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Europeans and Americans different? J. Public Econ. 88, 2009-2042.

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namics: New Findings from WID. world (No. w23119). National Bureau of Economic Re-

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Atkinson, Anthony B., Thomas Piketty, and Emmanuel Saez, “Top Incomes in the Long Run

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Incomes and Human Well-Being Around the World," CEP Discussion Papers dp1400, Centre

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Clark, A. E., Senik, C. (2011). “Is Happiness Different From Flourishing? Cross-Country Evi-

dence from the ESS”, Revue d'économie politique 2011/1 (Vol. 121), p. 17-34.

Clark A. (2015). “SWB as a Measure of Individual Well-Being”. In the Oxford Handbook of

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O'Connell, M., 2004. Fairly satisfied: economic equality, wealth and satisfaction. J. Econ. Psy-

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9

Tables

Table 1. Life satisfaction, all countries, year effects, no country effects

(1) (2) (3) (4) (5) (6)

Top10 -0.013 -0.004 -0.004

(0.010) (0.009) (0.008)

Top1 0.016 0.002 0.007

(0.019) (0.017) (0.013)

Female 0.160*** 0.159*** 0.144*** 0.141***

(0.021) (0.020) (0.028) (0.026)

Age -0.038*** -0.039*** -0.036*** -0.037***

(0.005) (0.004) (0.004) (0.004)

Age-squared 0.001*** 0.001*** 0.000*** 0.000***

(0.000) (0.000) (0.000) (0.000)

second step 0.162** 0.166** 0.223** 0.212**

(0.068) (0.064) (0.099) (0.098)

Third step 0.192*** 0.213*** 0.256*** 0.255***

(0.066) (0.061) (0.086) (0.087)

Fourth step 0.376*** 0.412*** 0.535*** 0.531***

(0.082) (0.076) (0.111) (0.106)

Fifth step 0.487*** 0.523*** 0.591*** 0.592***

(0.087) (0.083) (0.104) (0.104)

Sixth step 0.623*** 0.644*** 0.751*** 0.749***

(0.101) (0.095) (0.107) (0.108)

Seventh step 0.774*** 0.774*** 0.898*** 0.890***

(0.108) (0.102) (0.123) (0.123)

Eigth step 0.822*** 0.812*** 0.955*** 0.949***

(0.114) (0.107) (0.130) (0.131)

Nineth step 0.902*** 0.859*** 0.986*** 0.959***

(0.112) (0.104) (0.119) (0.115)

Tenth step 1.016*** 0.975*** 1.064*** 1.032***

(0.114) (0.107) (0.110) (0.112)

Part time -0.051 -0.066* -0.056 -0.064*

(0.040) (0.038) (0.038) (0.035)

Self employed -0.080 -0.068 -0.009 -0.018

(0.050) (0.050) (0.051) (0.049)

Retired 0.126** 0.128** 0.120** 0.112**

(0.054) (0.048) (0.049) (0.050)

Housewife -0.004 -0.015 0.012 0.006

(0.061) (0.059) (0.059) (0.058)

Students 0.082 0.088 0.022 0.023

(0.056) (0.054) (0.048) (0.046)

Unemployed -0.496*** -0.467*** -0.561*** -0.533***

(0.075) (0.068) (0.085) (0.086)

Other -0.160 -0.158 -0.166 -0.175

(0.122) (0.122) (0.124) (0.123)

Primary 0.161** 0.079 0.231** 0.223*

(0.079) (0.080) (0.114) (0.116)

Some secondary 0.280*** 0.143* 0.319*** 0.302**

(0.081) (0.083) (0.114) (0.116)

Secondary 0.165* 0.012 0.271** 0.240*

(0.087) (0.085) (0.123) (0.130)

University 0.219** 0.061 0.332** 0.289*

(0.093) (0.095) (0.139) (0.149)

Good -0.629*** -0.628*** -0.605*** -0.613***

(0.030) (0.029) (0.026) (0.025)

Fair -1.343*** -1.337*** -1.269*** -1.268***

(0.053) (0.054) (0.049) (0.050)

Poor -2.295*** -2.278*** -2.228*** -2.206***

(0.094) (0.090) (0.080) (0.080)

Very poor -2.230*** -2.211*** -2.661*** -2.615***

10

(0.315) (0.334) (0.222) (0.219)

Living together as married 0.038 -0.019 0.075 0.019

(0.052) (0.049) (0.050) (0.045)

Divorced -0.461*** -0.519*** -0.413*** -0.454***

(0.062) (0.060) (0.062) (0.062)

Separated -0.555*** -0.595*** -0.530*** -0.568***

(0.091) (0.091) (0.090) (0.088)

Widowed -0.365*** -0.374*** -0.356*** -0.361***

(0.063) (0.064) (0.052) (0.054)

Single/Never married -0.358*** -0.398*** -0.337*** -0.365***

(0.042) (0.041) (0.039) (0.035)

Rather important -0.216*** -0.198*** -0.261*** -0.267***

(0.045) (0.040) (0.044) (0.043)

Not very important -0.238*** -0.202*** -0.300*** -0.298***

(0.056) (0.053) (0.050) (0.051)

Not at all important -0.229*** -0.181** -0.277*** -0.262***

(0.069) (0.067) (0.053) (0.060)

Number of children 0.011 0.007 0.011 0.011

(0.011) (0.010) (0.011) (0.010)

Log of country's real GDP per capita 0.068 0.033

(0.106) (0.058)

GDP growth (annual %) -0.020 -0.038*

(0.034) (0.019)

Unemployment rate (% of total labor force) -0.032*** -0.019**

(0.012) (0.007)

Inflation, consumer prices (annual %) -0.021 0.022

(0.023) (0.019)

Constant 7.635*** 9.070*** 8.709*** 8.191*** 8.723*** 8.555***

(0.504) (0.357) (1.444) (0.172) (0.233) (0.688)

Observations 69784 47913 47913 60769 60769 60769

R2 0.043 0.192 0.197 0.048 0.193 0.196

Standard errors in parentheses * p < 0.1, ** p < 0.05, *** p < 0.01

Table 2. Happiness, all countries, year effects, no country effects

(1) (2) (3) (4) (5) (6)

Top10 -0.005 -0.005* -0.005**

(0.004) (0.003) (0.002)

Top1 0.008* -0.000 0.004

(0.004) (0.004) (0.004)

Female 0.051*** 0.050*** 0.047*** 0.044***

(0.008) (0.008) (0.008) (0.008)

Age -0.010*** -0.010*** -0.010*** -0.010***

(0.001) (0.001) (0.001) (0.001)

Age-squared 0.000*** 0.000*** 0.000*** 0.000***

(0.000) (0.000) (0.000) (0.000)

second step 0.009 0.011 -0.021 -0.027

(0.020) (0.019) (0.029) (0.030)

Third step 0.014 0.025 -0.017 -0.018

(0.022) (0.020) (0.029) (0.030)

Fourth step 0.033 0.051*** 0.016 0.018

(0.020) (0.017) (0.025) (0.025)

Fifth step 0.056** 0.075*** 0.036 0.038

(0.022) (0.018) (0.024) (0.025)

Sixth step 0.082*** 0.093*** 0.062** 0.061**

(0.024) (0.019) (0.028) (0.028)

Seventh step 0.116*** 0.116*** 0.099*** 0.093***

(0.026) (0.021) (0.026) (0.026)

Eigth step 0.136*** 0.132*** 0.120*** 0.113***

11

(0.029) (0.027) (0.031) (0.031)

Nineth step 0.149*** 0.130*** 0.127*** 0.106***

(0.026) (0.020) (0.028) (0.027)

Tenth step 0.212*** 0.189*** 0.181*** 0.159***

(0.027) (0.021) (0.028) (0.028)

Part time 0.012 0.004 0.016 0.013

(0.010) (0.009) (0.010) (0.010)

Self employed -0.005 0.004 -0.008 -0.001

(0.016) (0.014) (0.017) (0.015)

Retired 0.062*** 0.063*** 0.057*** 0.052***

(0.013) (0.011) (0.013) (0.013)

Housewife 0.016 0.012 0.018 0.020

(0.019) (0.018) (0.016) (0.016)

Students -0.007 -0.004 0.008 0.011

(0.018) (0.017) (0.018) (0.019)

Unemployed -0.081*** -0.067*** -0.080*** -0.071***

(0.019) (0.015) (0.022) (0.020)

Other -0.011 -0.010 -0.017 -0.021

(0.029) (0.026) (0.028) (0.025)

Primary 0.056* 0.015 0.083*** 0.070***

(0.029) (0.020) (0.022) (0.021)

Some secondary 0.097*** 0.028 0.114*** 0.094***

(0.034) (0.023) (0.024) (0.023)

Secondary 0.065** -0.010 0.091*** 0.067***

(0.031) (0.021) (0.021) (0.022)

University 0.069** -0.010 0.089*** 0.062**

(0.032) (0.023) (0.023) (0.023)

Good -0.287*** -0.284*** -0.289*** -0.289***

(0.013) (0.013) (0.012) (0.012)

Fair -0.452*** -0.446*** -0.453*** -0.448***

(0.017) (0.018) (0.015) (0.015)

Poor -0.531*** -0.520*** -0.509*** -0.498***

(0.025) (0.026) (0.030) (0.030)

Very poor -0.422*** -0.419*** -0.299*** -0.281***

(0.047) (0.050) (0.049) (0.049)

Living together as married 0.018 -0.015 0.019 -0.002

(0.019) (0.015) (0.015) (0.012)

Divorced -0.123*** -0.155*** -0.119*** -0.143***

(0.019) (0.016) (0.017) (0.017)

Separated -0.130*** -0.153*** -0.123*** -0.141***

(0.028) (0.025) (0.022) (0.022)

Widowed -0.159*** -0.163*** -0.151*** -0.153***

(0.019) (0.018) (0.019) (0.019)


(0.017) (0.016) (0.016) (0.016)


(0.013) (0.012) (0.013) (0.014)


(0.016) (0.015) (0.018) (0.017)

Not at all important -0.175*** -0.149*** -0.164*** -0.159***

(0.016) (0.015) (0.020) (0.020)

Number of children 0.008*** 0.007** 0.005 0.006**

(0.003) (0.003) (0.003) (0.003)

Log of country's real GDP per capita 0.055*** 0.025**

(0.020) (0.011)

GDP growth (annual %) -0.004 -0.013***

(0.007) (0.004)

Unemployment rate (% of total labor force) -0.015*** -0.006**

(0.003) (0.002)

Inflation, consumer prices (annual %) -0.009** 0.002

12

(0.004) (0.003)

Constant 3.317*** 3.817*** 3.373*** 3.206*** 3.658*** 3.459***

(0.140) (0.098) (0.273) (0.039) (0.060) (0.131)

Observations 70066 49157 49157 62032 62032 62032

R2 0.017 0.154 0.167 0.016 0.137 0.143


Table 3. Life satisfaction, all countries, year effects and country fixed effects

(1) (2) (3) (4) (5) (6)

Top10 -0.032* 0.013 0.007

(0.017) (0.020) (0.021)

Top1 0.117** 0.088*** 0.098***

(0.050) (0.031) (0.030)

Female 0.145*** 0.147*** 0.137*** 0.138***

(0.018) (0.018) (0.025) (0.025)

Age -0.040*** -0.040*** -0.037*** -0.037***

(0.004) (0.004) (0.004) (0.004)

Age-squared 0.000*** 0.000*** 0.000*** 0.000***

(0.000) (0.000) (0.000) (0.000)

second step 0.176*** 0.175*** 0.189* 0.185*

(0.063) (0.063) (0.098) (0.098)

Third step 0.231*** 0.236*** 0.279*** 0.278***

(0.063) (0.063) (0.090) (0.090)

Fourth step 0.448*** 0.456*** 0.532*** 0.533***

(0.075) (0.075) (0.104) (0.104)

Fifth step 0.584*** 0.593*** 0.670*** 0.671***

(0.086) (0.086) (0.107) (0.107)

Sixth step 0.704*** 0.713*** 0.801*** 0.800***

(0.094) (0.095) (0.108) (0.108)

Seventh step 0.820*** 0.830*** 0.943*** 0.941***

(0.106) (0.107) (0.127) (0.127)

Eigth step 0.824*** 0.830*** 0.963*** 0.959***

(0.110) (0.112) (0.136) (0.136)

Nineth step 0.835*** 0.833*** 0.936*** 0.927***

(0.094) (0.095) (0.112) (0.113)

Tenth step 0.929*** 0.926*** 0.984*** 0.978***

(0.101) (0.101) (0.110) (0.111)

Part time -0.090** -0.093** -0.087** -0.088**

(0.035) (0.036) (0.033) (0.033)

Self employed -0.011 -0.010 0.020 0.024

(0.040) (0.040) (0.039) (0.039)

Retired 0.115** 0.119** 0.111** 0.114**

(0.044) (0.045) (0.043) (0.044)

Housewife 0.056 0.047 0.034 0.030

(0.050) (0.051) (0.048) (0.048)

Students 0.137*** 0.140*** 0.086** 0.087**

(0.044) (0.043) (0.038) (0.038)

Unemployed -0.461*** -0.451*** -0.493*** -0.490***

(0.066) (0.067) (0.085) (0.086)

Other -0.088 -0.081 -0.087 -0.085

(0.095) (0.095) (0.097) (0.097)

Primary 0.067 0.048 0.178* 0.173

(0.065) (0.065) (0.104) (0.104)

Some secondary 0.121* 0.091 0.213** 0.205*

(0.068) (0.068) (0.103) (0.103)

Secondary 0.026 0.002 0.163 0.160

(0.070) (0.069) (0.118) (0.117)

University 0.093 0.075 0.224 0.224

13

(0.077) (0.076) (0.138) (0.138)

Good -0.599*** -0.601*** -0.596*** -0.597***

(0.027) (0.027) (0.023) (0.023)

Fair -1.312*** -1.314*** -1.261*** -1.261***

(0.050) (0.050) (0.048) (0.048)

Poor -2.284*** -2.282*** -2.230*** -2.231***

(0.089) (0.090) (0.077) (0.077)

Very poor -2.188*** -2.188*** -2.583*** -2.584***

(0.333) (0.334) (0.228) (0.228)

Living together as married -0.094** -0.092** -0.061 -0.059

(0.042) (0.042) (0.044) (0.044)

Divorced -0.562*** -0.561*** -0.502*** -0.502***

(0.052) (0.052) (0.057) (0.057)

Separated -0.657*** -0.663*** -0.637*** -0.639***

(0.086) (0.087) (0.089) (0.090)

Widowed -0.385*** -0.389*** -0.375*** -0.378***

(0.058) (0.058) (0.048) (0.048)


(0.039) (0.039) (0.038) (0.038)


(0.037) (0.037) (0.040) (0.040)


(0.044) (0.044) (0.048) (0.048)


(0.053) (0.054) (0.050) (0.050)

Number of children 0.010 0.011 0.012 0.012

(0.009) (0.010) (0.010) (0.010)

Log of country's real GDP per capita 0.605*** 0.068

(0.175) (0.147)

GDP growth (annual %) -0.011 -0.006

(0.025) (0.029)

Unemployment rate (% of total labor force) -0.020** -0.015

(0.010) (0.011)

Inflation, consumer prices (annual %) 0.018 -0.019

(0.016) (0.015)

Constant 8.454*** 8.560*** 2.365 6.392*** 7.621*** 7.006***

(0.463) (0.664) (1.782) (0.631) (0.446) (1.455)

Observations 69784 47913 47913 60769 60769 60769

R2 0.073 0.211 0.212 0.074 0.211 0.211


Table 4. Happiness, all countries, year effects and country fixed effects

(1) (2) (3) (4) (5) (6)

Top10 -0.002 -0.000 -0.005*

(0.003) (0.002) (0.003)

Top1 0.010 0.003 0.002

(0.008) (0.004) (0.004)

Female 0.049*** 0.049*** 0.046*** 0.047***

(0.008) (0.008) (0.008) (0.008)

Age -0.010*** -0.010*** -0.010*** -0.010***

(0.001) (0.001) (0.001) (0.001)

Age-squared 0.000*** 0.000*** 0.000*** 0.000***

(0.000) (0.000) (0.000) (0.000)

second step 0.011 0.012 -0.026 -0.026

(0.019) (0.019) (0.030) (0.030)

Third step 0.028 0.029 -0.006 -0.006

(0.020) (0.020) (0.030) (0.030)

Fourth step 0.059*** 0.061*** 0.033 0.033

14

(0.017) (0.017) (0.024) (0.024)

Fifth step 0.083*** 0.085*** 0.060** 0.061**

(0.019) (0.019) (0.025) (0.025)

Sixth step 0.098*** 0.100*** 0.073*** 0.073***

(0.019) (0.019) (0.027) (0.027)

Seventh step 0.115*** 0.118*** 0.097*** 0.098***

(0.020) (0.020) (0.025) (0.025)

Eigth step 0.124*** 0.127*** 0.107*** 0.108***

(0.025) (0.025) (0.029) (0.030)

Nineth step 0.116*** 0.117*** 0.096*** 0.096***

(0.018) (0.018) (0.026) (0.026)

Tenth step 0.161*** 0.162*** 0.135*** 0.135***

(0.021) (0.021) (0.028) (0.028)

Part time 0.005 0.005 0.011 0.011

(0.009) (0.009) (0.009) (0.009)

Self employed 0.015 0.015 0.006 0.006

(0.011) (0.011) (0.013) (0.013)

Retired 0.068*** 0.068*** 0.063*** 0.063***

(0.009) (0.010) (0.010) (0.010)

Housewife 0.029** 0.028** 0.029** 0.029**

(0.014) (0.014) (0.013) (0.013)

Students 0.010 0.010 0.023 0.023

(0.014) (0.014) (0.016) (0.016)

Unemployed -0.062*** -0.061*** -0.063*** -0.063***

(0.014) (0.014) (0.021) (0.021)

Other 0.012 0.012 0.008 0.008

(0.023) (0.023) (0.022) (0.023)

Primary 0.008 0.004 0.061*** 0.060**

(0.022) (0.022) (0.023) (0.023)

Some secondary 0.020 0.014 0.068*** 0.067***

(0.024) (0.024) (0.024) (0.024)

Secondary -0.009 -0.014 0.048** 0.047**

(0.022) (0.023) (0.023) (0.023)

University -0.005 -0.009 0.048* 0.047*

(0.024) (0.024) (0.025) (0.025)

Good -0.271*** -0.271*** -0.276*** -0.276***

(0.012) (0.012) (0.011) (0.011)

Fair -0.438*** -0.438*** -0.440*** -0.440***

(0.018) (0.018) (0.015) (0.015)

Poor -0.523*** -0.522*** -0.498*** -0.498***

(0.024) (0.025) (0.030) (0.030)

Very poor -0.413*** -0.413*** -0.290*** -0.290***

(0.049) (0.049) (0.048) (0.048)

Living together as married -0.037*** -0.037*** -0.036*** -0.036***

(0.012) (0.012) (0.010) (0.010)

Divorced -0.171*** -0.170*** -0.165*** -0.165***

(0.015) (0.015) (0.015) (0.015)

Separated -0.171*** -0.172*** -0.162*** -0.162***

(0.023) (0.023) (0.020) (0.020)

Widowed -0.165*** -0.165*** -0.157*** -0.157***

(0.019) (0.019) (0.019) (0.019)


(0.015) (0.015) (0.014) (0.014)


(0.010) (0.010) (0.011) (0.011)


(0.010) (0.010) (0.011) (0.011)


(0.010) (0.010) (0.012) (0.012)

Number of children 0.005* 0.005* 0.002 0.002

15

(0.002) (0.002) (0.002) (0.002)

Log of country's real GDP per capita 0.121*** 0.029

(0.026) (0.026)

GDP growth (annual %) 0.000 0.001

(0.003) (0.004)

Unemployment rate (% of total labor force) 0.000 0.001

(0.002) (0.002)

Inflation, consumer prices (annual %) 0.006*** 0.000

(0.002) (0.003)

Constant 3.320*** 3.738*** 2.553*** 3.010*** 3.544*** 3.288***

(0.094) (0.081) (0.262) (0.092) (0.066) (0.254)

Observations 70066 49157 49157 62032 62032 62032

R2 0.058 0.180 0.180 0.052 0.158 0.158


Table 5. Life satisfaction, year effects and country fixed effects – results by continents

(1) (2) (3) (4) (5) (6)

Europe

Top10 0.003 -0.031 -0.004

(0.034) (0.031) (0.006)

Top1 -0.018 -0.055 -0.005

(0.046) (0.042) (0.010)

North America

Top10 -0.106*** 0.008 -0.036**

(0.000) (0.013) (0.010)

Top1 -0.070*** 0.012 -0.023**

(0.000) (0.018) (0.006)

Asia

Top10 -0.041 0.017** 0.170***

(0.024) (0.006) (0.022)

Top1 0.131*** 0.036** 0.277***

(0.000) (0.016) (0.084)

South America and Africa

Top10 0.000 0.000 0.000

(.) (.) (.)

Top1 0.304*** 0.240*** 0.131***

(0.000) (0.011) (0.006)

Australia and New Zealand

Top10 -0.110*** -0.113*** -0.049

(0.000) (0.009) (0.026)

Top1 -0.176*** -0.178*** 0.608

(0.000) (0.014) (0.316)

Micro correlates No Yes Yes No Yes Yes

Macro correlates No No Yes No No Yes


16

Table 6. Happiness, year effects and country fixed effects – results by continents

(1) (2) (3) (4) (5) (6)

Europe

Top10 -0.008* -0.015*** 0.004***

(0.004) (0.003) (0.001)

Top1 -0.022*** -0.022*** 0.006***

(0.005) (0.004) (0.002)

North America

Top10 -0.036*** -0.006 -0.032***

(0.000) (0.004) (0.006)

Top1 -0.033*** -0.008 -0.021***

(0.000) (0.005) (0.004)

Asia

Top10 -0.012** -0.000 0.037***

(0.005) (0.001) (0.005)

Top1 0.019*** 0.001 0.078***

(0.000) (0.002) (0.012)

South America and Africa

Top10 0.000 0.000 0.000

(.) (.) (.)

Top1 0.035*** 0.032** 0.022***

(0.000) (0.007) (0.002)

Australia and New Zealand

Top10 -0.004*** -0.022*** -0.017*

(0.000) (0.002) (0.008)

Top1 -0.047*** -0.034*** 0.204*

(0.000) (0.004) (0.093)

Micro correlates No Yes Yes No Yes Yes

Macro correlates No No Yes No No Yes


Table 7. Life satisfaction, all countries, 2006-2012, year effects and country fixed effects

(1) (2) (3) (4) (5) (6)

Top10 -0.260*** 1.924*** -0.019***

(0.086) (0.134) (0.002)

Top1 0.397*** 0.496*** -0.080***

(0.000) (0.042) (0.010)

Female 0.145*** 0.145*** 0.177*** 0.177***

(0.022) (0.022) (0.036) (0.036)

Age -0.033*** -0.033*** -0.032*** -0.032***

(0.005) (0.005) (0.005) (0.005)

Age-squared 0.000*** 0.000*** 0.000*** 0.000***

(0.000) (0.000) (0.000) (0.000)

second step 0.181** 0.181** 0.272** 0.272**

(0.075) (0.075) (0.098) (0.098)

Third step 0.232*** 0.232*** 0.320*** 0.320***

(0.075) (0.075) (0.092) (0.092)

Fourth step 0.492*** 0.492*** 0.611*** 0.611***

(0.094) (0.094) (0.127) (0.127)

Fifth step 0.573*** 0.573*** 0.690*** 0.690***

(0.090) (0.090) (0.124) (0.124)

Sixth step 0.743*** 0.743*** 0.856*** 0.856***

(0.090) (0.090) (0.119) (0.119)

17

Seventh step 0.899*** 0.899*** 1.053*** 1.053***

(0.111) (0.111) (0.164) (0.164)

Eigth step 0.949*** 0.949*** 1.129*** 1.129***

(0.120) (0.120) (0.187) (0.187)

Nineth step 0.912*** 0.912*** 1.053*** 1.053***

(0.097) (0.097) (0.148) (0.148)

Tenth step 0.913*** 0.913*** 1.047*** 1.047***

(0.106) (0.106) (0.149) (0.149)

Part time -0.096** -0.096** -0.106*** -0.106***

(0.037) (0.037) (0.035) (0.035)

Self employed -0.022 -0.022 -0.014 -0.014

(0.046) (0.046) (0.044) (0.044)

Retired 0.098* 0.098* 0.101* 0.101*

(0.055) (0.055) (0.052) (0.052)

Housewife 0.141** 0.141** 0.104 0.104

(0.061) (0.061) (0.068) (0.068)

Students 0.105 0.105 0.069 0.069

(0.069) (0.069) (0.065) (0.065)

Unemployed -0.512*** -0.512*** -0.487*** -0.487***

(0.087) (0.087) (0.064) (0.064)

Other 0.042 0.042 0.047 0.047

(0.142) (0.142) (0.140) (0.140)

Primary 0.053 0.053 0.071 0.071

(0.067) (0.067) (0.057) (0.057)

Some secondary 0.114 0.114 0.113* 0.113*

(0.072) (0.072) (0.055) (0.055)

Secondary 0.030 0.030 0.057 0.057

(0.079) (0.079) (0.065) (0.065)

University 0.076 0.076 0.082 0.082

(0.098) (0.098) (0.082) (0.082)

Good -0.594*** -0.594*** -0.590*** -0.590***

(0.043) (0.043) (0.039) (0.039)

Fair -1.339*** -1.339*** -1.336*** -1.336***

(0.072) (0.072) (0.065) (0.065)

Poor -2.457*** -2.457*** -2.413*** -2.413***

(0.124) (0.124) (0.117) (0.117)

Living together as married -0.145*** -0.145*** -0.161*** -0.161***

(0.042) (0.042) (0.040) (0.040)

Divorced -0.529*** -0.529*** -0.509*** -0.509***

(0.076) (0.076) (0.077) (0.077)

Separated -0.589*** -0.589*** -0.593*** -0.593***

(0.110) (0.110) (0.106) (0.106)

Widowed -0.371*** -0.371*** -0.348*** -0.348***

(0.060) (0.060) (0.058) (0.058)


(0.053) (0.053) (0.049) (0.049)


(0.047) (0.047) (0.043) (0.043)


(0.053) (0.053) (0.052) (0.052)


(0.073) (0.073) (0.069) (0.069)

Number of children -0.004 -0.004 -0.013 -0.013

(0.011) (0.011) (0.013) (0.013)

Log of country's real GDP per capita -1.127*** -0.894***

(0.054) (0.032)

GDP growth (annual %) -0.098*** -0.214***

(0.010) (0.029)

Unemployment rate (% of total labor force) -0.062*** -0.081***

(0.003) (0.002)

18

Inflation, consumer prices (annual %) -0.181*** -0.121***

(0.010) (0.013)

Very poor -3.197*** -3.197***

(0.050) (0.050)

Constant 15.182*** -

50.180***

22.471*** 3.938*** 3.966*** 20.936***

(2.671) (4.195) (0.755) (0.000) (0.534) (0.568)

Observations 32731 25817 25817 28475 28475 28475

R2 0.044 0.217 0.217 0.040 0.214 0.214


Table 8. Happiness, all countries, 2006-2012, year effects and country fixed effects

(1) (2) (3) (4) (5) (6)

Top10 -0.047*** 0.296*** -0.007***

(0.013) (0.034) (0.000)

Top1 0.037*** 0.073*** 0.004*

(0.000) (0.007) (0.002)

Female 0.055*** 0.055*** 0.057*** 0.057***

(0.011) (0.011) (0.010) (0.010)

Age -0.010*** -0.010*** -0.011*** -0.011***

(0.002) (0.002) (0.002) (0.002)

Age-squared 0.000*** 0.000*** 0.000*** 0.000***

(0.000) (0.000) (0.000) (0.000)

second step 0.012 0.012 0.006 0.006

(0.029) (0.029) (0.025) (0.025)

Third step 0.014 0.014 0.014 0.014

(0.029) (0.029) (0.025) (0.025)

Fourth step 0.062** 0.062** 0.047** 0.047**

(0.022) (0.022) (0.022) (0.022)

Fifth step 0.084*** 0.084*** 0.084*** 0.084***

(0.022) (0.022) (0.018) (0.018)

Sixth step 0.112*** 0.112*** 0.105*** 0.105***

(0.024) (0.024) (0.021) (0.021)

Seventh step 0.126*** 0.126*** 0.129*** 0.129***

(0.028) (0.028) (0.024) (0.024)

Eigth step 0.190*** 0.190*** 0.195*** 0.195***

(0.028) (0.028) (0.024) (0.024)

Nineth step 0.160*** 0.160*** 0.167*** 0.167***

(0.028) (0.028) (0.027) (0.027)

Tenth step 0.213*** 0.213*** 0.208*** 0.208***

(0.028) (0.028) (0.025) (0.025)

Part time 0.014 0.014 0.009 0.009

(0.012) (0.012) (0.012) (0.012)

Self employed 0.015 0.015 0.010 0.010

(0.019) (0.019) (0.019) (0.019)

Retired 0.079*** 0.079*** 0.070*** 0.070***

(0.014) (0.014) (0.016) (0.016)

Housewife 0.028 0.028 0.022 0.022

(0.018) (0.018) (0.018) (0.018)

Students -0.012 -0.012 0.007 0.007

(0.023) (0.023) (0.024) (0.024)

Unemployed -0.091*** -0.091*** -0.114*** -0.114***

(0.012) (0.012) (0.018) (0.018)

Other 0.031 0.031 0.025 0.025

(0.033) (0.033) (0.033) (0.033)

Primary -0.029 -0.029 0.031 0.031

(0.032) (0.032) (0.055) (0.055)

Some secondary -0.018 -0.018 0.048 0.048

19

(0.034) (0.034) (0.060) (0.060)

Secondary -0.055* -0.055* 0.010 0.010

(0.030) (0.030) (0.058) (0.058)

University -0.056 -0.056 0.008 0.008

(0.035) (0.035) (0.059) (0.059)

Good -0.300*** -0.300*** -0.298*** -0.298***

(0.014) (0.014) (0.013) (0.013)

Fair -0.482*** -0.482*** -0.482*** -0.482***

(0.021) (0.021) (0.019) (0.019)

Poor -0.573*** -0.573*** -0.548*** -0.548***

(0.031) (0.031) (0.038) (0.038)

Living together as married -0.039** -0.039** -0.042*** -0.042***

(0.016) (0.016) (0.014) (0.014)

Divorced -0.171*** -0.171*** -0.171*** -0.171***

(0.021) (0.021) (0.020) (0.020)

Separated -0.126*** -0.126*** -0.136*** -0.136***

(0.029) (0.029) (0.029) (0.029)

Widowed -0.157*** -0.157*** -0.165*** -0.165***

(0.026) (0.026) (0.025) (0.025)


(0.021) (0.021) (0.019) (0.019)


(0.017) (0.017) (0.015) (0.015)


(0.014) (0.014) (0.013) (0.013)


(0.014) (0.014) (0.014) (0.014)

Number of children 0.006* 0.006* 0.003 0.003

(0.003) (0.003) (0.004) (0.004)

Log of country's real GDP per capita 0.029*** -0.015**

(0.009) (0.007)

GDP growth (annual %) -0.003 0.029***

(0.002) (0.006)

Unemployment rate (% of total labor force) -0.008*** -0.002***

(0.001) (0.000)

Inflation, consumer prices (annual %) 0.010*** -0.021***

(0.002) (0.003)

Very poor -0.189*** -0.189***

(0.036) (0.036)

Constant 4.786*** -5.073*** 3.914*** 3.065*** 3.269*** 3.826***

(0.414) (1.037) (0.118) (0.000) (0.087) (0.114)

Observations 32760 25839 25839 28494 28494 28494

R2 0.057 0.193 0.193 0.049 0.185 0.185


Documents

Top Incomes and Subjective Well-being(Kelley and Evans 2016). On the other hand, income inequality may be perceived positively in the society if it is considered in the perspective