Why Inequality Makes Europeans Less Happy: The Role of Distrust, Status Anxiety, and Perceived Conflict

Abstract

Are more equal societies 'better' societies? This article addresses the question as to whether and why income inequality lowers the degree of Europeans' subjective well-being. While in broad international comparisons typically no clear-cut link between income inequality and (un)happiness exists, we can demonstrate that Europeans are somewhat less happy in more unequal places. We further discuss and empirically test three explanations as to why Europeans are inequality-averse, namely (dis)trust, status anxiety, and perceived conflicts. Each of these three potential mediators is hypothesized to be shaped by the extent of a nation's income inequality, and in turn to result in lower subjective well-being. A multilevel mediation analysis with data from the European Quality of Life Survey 2007 for 30 countries reveals that distrust and status anxiety are important mediators of inequality aversion, whereas perceived conflict is not. We can further show that trust is the crucial mediator among affluent societies, whereas status anxiety is crucial among the less affluent societies. The results are discussed with reference to the Spirit Level theory developed by Richard Wilkinson and Kate Pickett.