Tuesday, 3 December 2013

Mind the gap: Well-being differences growing in several countries in the EU

This post, written by Saamah Abdallah of the new economics foundation (nef), is part of the Wikiprogress focus on How's Life? 2013 chapter on "Well-being and the global financial crisis" and or series on Subjective Well-being.

There is a strong perception that the economic crisis has ‘disproportionately hit those who are already vulnerable’ (European Commission) and has ‘deepened inequalities’. This month, the European Foundation for the Improvement of Working and Living Conditions has published a report showing that, in several countries in the EU, this growing inequality can be seen in well-being as well as more traditional metrics such as income inequality.

The report looks at how subjective well-being changed between 2007 and 2011 in the 27 countries of the EU over that time. As might be expected, average life satisfaction in several countries fell significantly, including in Greece and Estonia, as well as in some Nordic countries such as Sweden and Finland.  But it rose in several other countries, including the new accession countries (Romania and Bulgaria), Poland, Spain and Italy. Some countries presented mixed patterns, with some measures appearing to show increases in well-being, whilst others showed decreases (for example perceived social exclusion rose in Spain despite increases in life satisfaction). Overall, the pattern was one of declining well-being on the majority of measures.

What was more interesting, however, was the differences in trends when one looked at different population groups within countries. For example, whilst average life satisfaction did not change in the UK and Ireland, it fell significantly for those in the bottom income quartile, and rose significantly for those in the top income quartile.  Meanwhile in Spain, Italy and Portugal, the surprising increase in life satisfaction can only be seen for those in the top half of the income distribution – there was no increase in life satisfaction for people in the bottom half of the income distribution. Indeed, overall happiness fell significantly for those in the second income quartile and perceived social exclusion rose. Finally, in Greece, despite the brutal economic crisis, there has been no fall in life satisfaction for those in the top half of the income distribution.  In contrast, average life satisfaction fell by a whole 1.0 points (on a scale of 1-10) for those in the bottom income quartile.

In summary – the effects of the economic crisis are not being felt equally in many parts of Europe.  And whilst some people argue that high economic inequality is acceptable and even desirable because it stimulates effort, it is hard to see a positive side to growing well-being inequality. You can theoretically argue that people have chosen to forfeit income in exchange for more free time, for example, but you can’t argue that people have willingly chosen to have lower well-being.  And reducing the well-being of the poorest is hardly an effective way to increase their motivation, given that it is usually positive emotions that lead to people being able to improve their situation (according to broaden-and-build theory).  Growing well-being inequality is the clearest manifestation yet of the unfair impact of the economic crisis.

Saamah Abdallah

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