The Mediating Role of Perception of Society Between Income Inequality and Life Satisfaction. Insights from the European Social Survey

Abstract The mechanisms between inequality and well-being are not fully known. There is a body of knowledge assuming personal information on the social environment can be important here. In this article, we consider this perception of society (POS) as a mediator between income inequality and life satisfaction. Our research questions are: 1) How are various measures of income inequality associated with life satisfaction, and 2) does the POS mediate the effect of inequality on life satisfaction? The individual-level data come from the European Social Survey 2008 ( N = 56,752) and the macro-level data from OECD and World Bank. We use a comprehensive and psychometrically valid measure of the POS to capture individuals' full societal perceptions. The data is analysed with a multilevel linear regression and the mediation effect is tested with a Sobel test. The results reveal significant differences between indicators of income inequality in their ability to predict life satisfaction. Moreover, POS is strongly associated with life satisfaction and mediates the association of income inequality on life satisfaction. In addition, we observed the so-called ‘saturation effect.’ The effect of POS depends on objective conditions—the better the society, the smaller the effect.