Do Envy and Compassion Pave the Way to Unhappiness? Social Preferences and Life Satisfaction in a Spanish City
Journal of Happiness Studies, Forthcoming
58 Pages Posted: 8 Oct 2015 Last revised: 4 Dec 2016
Date Written: December 1, 2016
Mounting evidence shows that people’s self-reported life satisfaction (LS) is negatively related to income inequality. Under the interpretation that the relationship between macro-level variables and LS reflects individuals’ social preferences, this finding indicates that most people display inequality-averse preferences. We explore the relationship between self-reports on inequality aversion and LS in a citywide representative survey/experiment conducted in Spain. If self-reported well-being can be used to infer people’s social preferences, LS should correlate negatively with both “envy” and “compassion” scores (i.e., how much one suffers from disadvantageous and advantageous inequality, respectively). We find that LS relates negatively to envy but positively to compassion, which would imply that suffering from observing poorer others, paradoxically, increases well-being. Using an incentivized Dictator Game as a measure of generous behavior, we reject the hypothesis that the positive link between compassion and LS is actually driven by generosity. We discuss how these findings could indicate that the way LS is used to assess social preferences in the population should be revised.
Keywords: well-being, life satisfaction, happiness, social preferences, inequality aversion, competitiveness, generosity, dictator game
JEL Classification: I31, D03, D12, D31, D63, D64
Suggested Citation: Suggested Citation