Requiem for a Dream: Perceived Economic Conditions and Subjective Well-Being in Times of Prosperity and Economic Crisis
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Requiem for a Dream: Perceived Economic Conditions and Subjective Well‑Being in Times of Prosperity and Economic Crisis Roger Fernandez‑Urbano1 · Nevena Kulic2 Accepted: 1 June 2020 © Springer Nature B.V. 2020
Abstract Using the Panel of Social Inequalities in Catalonia, Spain (PaD 2001–2012), this article investigates the relationship between perceptions of economic conditions and subjective well-being in times of prosperity and economic crisis. It also analyses how this relationship plays out across different social backgrounds. Periods of economic crisis and prosperity serve as a proxy for objective macroeconomic conditions. The Spanish region of Catalonia is a relevant setting because it faced one of the highest increases in inequality and unemployment in Europe as a result of the 2008 Economic Crisis. Our results show that perceived economic conditions matter beyond objective micro and macroeconomic realm and become a strong determinant of subjective well-being during a crisis, particularly for the middle class. However, contrary to our initial expectations, our results also show the existence of a close correlation between perceptions of economic conditions and subjective well-being for low social background individuals in times of economic prosperity, and an even stronger relationship in times of economic crisis. The article stipulates several potential explanations for these results. Keywords Subjective well-being · Perceptions · Social background · Economic crisis · Spain
1 Introduction Individual subjective well-being is thought to be largely influenced by objective material conditions such as income and employment (Andersen 2008; Strandh 2001). Given that income in economic and philosophical theory is seen as an important means of autonomy, * Roger Fernandez‑Urbano roger.fernandez‑[email protected] * Nevena Kulic nevena.kulic@uni‑konstanz.de 1
Department of Political and Social Sciences, European University Institute, Via dei Roccettini, 9, 50014 San Domenico di Fiesole, Florence, Italy
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Cluster of Excellence “The Politics of Inequality”, University of Konstanz, Universitaetsstrasse 10, 78464 Constance, Germany
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R. Fernandez‑Urbano, N. Kulic
there is abundant literature on the extent to which individual income may improve individual subjective well-being (Layard 2010; Sen 2009). While positive returns due to a growing income are documented, a study by Easterlin (1974) revealed that subjective well-being only increases with increasing income up to a certain point, after which it stabilizes and even starts to decrease. This is known as the ‘Easterlin Paradox’, and it motivated consequential research on the phenomenon (i.e. within the well-known economics of happiness literature). While income is expressed numerically and people are asked to report it factually without endowing it with personal characteristics, this can sometimes narrow the real picture of the well-being of an individual. Instead, subjective indicators of economic conditions measure attitudes and can also
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