Wealth of Nations, Individual Income and Life Satisfaction in 42 Countries: A Multilevel Approach

Abstract

In this study, individual and contextual determinants of life satisfaction in 42 countries were examined. The question was addressed whether income at the individual level and wealth at the national level affect life satisfaction of individuals. In addition, the hypothesis was tested whether the relationship between income and life satisfaction is stronger in poor countries than in more prosperous ones. Multilevel modeling allows differentiating between main and interaction effects of group and individual level variables on the dependent variable. It was used to explore a possible multilevel structure in the data, in which individuals are viewed as micro observations and countries as macro observations. The results showed that, in addition to and independent of individual income, the economic prosperity of a nation contributed to a person's life satisfaction level. Also, the hypothesized cross-level interaction between wealth and income was tested and found significant: poor people living in poor countries were less satisfied with their lives than poor people living in affluent countries. Moreover, complex variation in life satisfaction was found at the within-nation level: poor individuals varied more in their life satisfaction than rich individuals.