Income Redistribution Predicts Greater Life Satisfaction Across Individual, National, and Cultural Characteristics

Abstract

The widening income gap between the rich and the poor has important social implications. Governmental-level income redistribution through tax and welfare policies presents an opportunity to reduce income inequality and its negative consequences. The current longitudinal studies examined whether within-region changes in income redistribution over time relate to life satisfaction. Moreover, I examined potential moderators of this relationship to test the strong versus weak hypotheses of income redistribution. The strong hypothesis posits that income redistribution is beneficial to most. The weak hypothesis posits that income redistribution is beneficial to some and damaging to others. Using a nationally representative sample of 57,932 German respondents from 16 German states across 30 years (Study 1) and a sample of 112,876 respondents from 33 countries across 24 years (Study 2), I found that within-state and within-nation changes in income redistribution over time were associated with life satisfaction. The models predicted that a 10% reduction in Gini through income redistribution in Germany increased life satisfaction to the same extent as an 37% increase in annual income (Study 1), and a 5% reduction in Gini through income redistribution increased life satisfaction to the same extent as a 11% increase in GDP (Study 2). These associations were positive across individual, national, and cultural characteristics. Increases in income redistribution predicted greater satisfaction for tax-payers and welfare-receivers, for liberals and conservatives, and for the poor and the rich. These findings support the strong hypothesis of income redistribution and suggest that redistribution policies may play an important role in societal well-being.