Economic freedom, income inequality and life satisfaction in OECD countries

Johan Graafland, Bjorn Lous

Research output: Contribution to journalArticleScientificpeer-review

13 Citations (Scopus)

Abstract

Since Piketty’s Capital in the 21st Century in 2014, scientific interest into the
impact of income inequality on society has been on the rise. However, little is known about the mediating role of income inequality in the relationship between market institutions and subjective well-being. Using panel analysis on a sample of 21 OECD countries to test the effects of five different types of economic freedom on income inequality, we find that fiscal freedom, free trade and freedom from government regulation increase income inequality, whereas sound money decreases income inequality. Income inequality is found to have a
negative effect on life satisfaction. Mediation tests show that income inequality mediates the influence of fiscal freedom, free trade and freedom from government regulation on life satisfaction.
Original languageEnglish
Pages (from-to)2071-2093
JournalJournal of Happiness Studies
Volume19
Issue number7
DOIs
Publication statusPublished - Oct 2018

Keywords

  • Economic freedom
  • income inequality
  • life satisfaction
  • mediation
  • regulation
  • tax freedom
  • trade freedom

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