Empirical Economic Bulletin, An Undergraduate Journal


This paper examines the interaction between life satisfaction and income inequality in European nations from 2006 to 2016. The keys finding of the analysis and the results show that countries that promote collectivism tend to have people with higher life satisfaction than countries which promote individualism. In general, individuals prefer to live in a country where they have stable disposable income, freedom in the way they are thinking, trust in their government and policies, a healthy life expectancy, and social support and generosity from peers. With this in mind, it raises the question, “where does income inequality fit into this?” By using macro-level data from various sources, our results show that income inequality affects life satisfaction positively. Yet, our results also show that when the top or bottom 10% has access to higher income, life satisfaction is affected negatively.