Income Inequality, Life Satisfaction Inequality andTrust

Literature has argued that income inequality crowds out trust. However, whether income inequality makes people less trusting depends on how they perceive income inequality within their personal social context and social cognition. In this paper we therefore conjecture that the relationship of income inequality to trust depends on how income inequality afects inequality of life satisfaction. If life satisfaction inequality is high, distrust is generated among the least happy. This will increase polarization and the risk of rebellion, thereby also afecting trust among the happier people. Thus, life satisfaction inequality may be an essential factor in the relationship between income inequality and trust. In previous literature, the potential mediating role of life satisfaction inequality in the relationship between income inequality and social trust has not yet received attention. We test our model by panel analysis on 25 OECD countries in the period 1990-2014. The panel analysis shows that income inequality increases life satisfaction inequality and that both income inequality and life satisfaction inequality have a signifcant negative impact on social trust. Mediation tests show complementary mediation: besides the direct negative efect of income inequality on trust, we fnd an indirect efect mediated by life satisfaction inequality. This indirect efect counts for 20% of the total efect of income inequality on trust. Our results imply that policy options for increasing trust are not limited to countering income inequality, but can also include policy measures that directly reduce inequality of life satisfaction.

Could you please explain the following tables briefly on the basis of the above description. Thank you.

Please explain Table 1.

Table 1 List of countries Country Number of observations per country Country Number of observations per country Western-Europe (15) Net Gini Life satisfactrceived social Objective Eastern-Europe [(7) Net Gini Life satisfactrceived social Objective tion inequality trust WVS&EVS Social Trust tion inequality trust WVS&EVS social trust ISS ISS Austria 18 18 Czech Republic 12 12 Belgium 18 18 W W N Estonia 12 12 Denmark 18 18 Hungary 12 12 Finland 18 18 Latvia 13 13 NNNNNNN France 18 18 Poland 12 12 N - N- Germany 18 18 Slovakia 12 12 Greece 18 18 Slovenia 12 12 Ireland 18 18 Italy 18 18 Asia and Oceania (3) AAANWNWNNWW Luxembourg 18 18 Israel 9 9 Netherlands 18 18 Japan 18 18 NAN -A- Portugal 18 18 Turkey 11 11 Spain 18 18 Sweden 18 18 United Kingdom 18 18Table 2 Descriptive statistics Variable Symbol Source Mean Standard Min Max deviation Net Gini coefficient Net Gini Solt Database (Harvard University) 0.30 0.05 0.18 0.44 Life satisfaction inequality LSI Veenhoven 1.89 0.22 1.35 2.79 Trust Perceived social trust WVS and EVS 0.35 0.16 0.05 0.78 Interpersonal trust and safety Objective social trust Institute of social studies, EUR 0.56 0.05 0.44 0. 70 Log of GDP per capita in U. S. dollars at pur- GDP World Bank 10.32 0.41 9.01 1 1.48 chasing power parity and constant prices Female as % of total population Female World Bank 51.10 0.90 49.65 54.31 Unemployment rate (%) Unemp World Bank 8.05 4.02 1.5 27.2 Christian (9%) Christian Pew research center's 0.62 0.29 0.004 0.95 Muslim (%) Muslim Pew research center's 0.07 0.17 0.001 0.98 Political rights Pol Rights Freedom house 1.23 0.79 S Civil liberty Civ Liberty Freedom house 1.51 0.89 Monarchy [yes (1) or no (0)] Monarchy Population > 65 (%) Age old World Bank 14.34 3.33 4.54 25.71 Population (65)/15-65) Age dep World Bank 0.50 0.05 0.36 0.69 Urbanization rate (%) Urban World Bank 76.09 12.26 47.92 100 Exports as % of GDP Exports World Bank 47.77 38.70 9.00 230.27 Infant mortality (1/1000 births) World Bank 6.20 5.61 1.7 55.6Table 3 Bivariate correlation (Pearson's correlation coefficients) Perceived social trust Objective social trust Net Gini LSI Perceived social trust Objective social trust 0.34* Net Gini -0.37** -0.17* LSI -0.70* * -0.32** 0.61* * Table 4 Estimation results Model 1 Model 2 2 3 4 LSI Perceived social trust LSI Objective social trust LSL- -0.34** (BI) -0.15** (PI) Net Gini_, 0.86* * (a2) -1.13* * (01) 0.86* (a2) -0.37* (a,) GDP -0.03 -0.01 -0.03 0.01 Unemp 0.01* * * 0.00 0.01* * * 0.00 Female 0.05* * - 0.03 0.05* * * - 0.02 Christian 0.14* 0.06 0.14* * 0.04 Muslim 0.55* * -0.59* * 0.55* * -0.23 Pol rights -0.02 0.28** * -0.02 0.08 Civ liberty 0.10*#* -0.03 0.10* * 0.05* * Monarchy - 0.05* * 0.03 -0.05* * 0.01 Age old - 0.01* * -0.01* -0.01* * -0.00 Age dep -0.07 1.03** -0.08 0.18 Urban 0.00 -0.00 Exports -0.00* -0.00 Infant mortality -0.00 0.00 -0.00 0.00 R 0.70 0.65 Wald Chi2 1326.58 1591.62 Hausman 0.51 0.98 0.51 0.65 N observations 413 77 413 78 N countries 25 25 25 25 "p