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Income, Values and Subjective Wellbeing in Europe: Results from the EVS 1999-2017 Data

Published onMay 09, 2022
Income, Values and Subjective Wellbeing in Europe: Results from the EVS 1999-2017 Data


The basic idea is to view the effects of objective and subjective modernization on subjective wellbeing (SWB). Objective modernisation refers to the nation’s socio-economic development, indicated by GDP, absolute and relative income, and income inequality. Subjective modernization refers to people’s modernization values including work and social values. Modernisation values used are (post-)materialism and gender-role and leisure time values. Work and social values pertain to work ethos and intrinsic or extrinsic work orientations and to trust in other people and the importance of family and friends and how leisure time is valued. The EVS data used cover a period of 20 years. A multi-level regression model has been estimated with modernisation indicators on country and individual level and controls for gender, age, personal income, health and health behaviour (sports). The story found is clear. The findings illustrate the strong effects of absolute and relative income for people’s happiness, but, allegedly, more interesting are the strong effects of work and social values on SWB and the smaller but significant effects of all modernisation values which appear rather stable over time. People who hold strong social values gain in happiness because they engage more in social networks and relationships.

23.1 Introduction

My history with the European Values Study (EVS) and Loek goes back to the late 1990s when I became a colleague of Loek Halman at the Department of Sociology. At that time, I worked on the topic of subjective wellbeing and became aware of the EVS being the pearl of the Department and the information contained in the excellent comparative values datasets. Loek Halman and Inge Sieben asked me in 2010 to write a chapter on subjective wellbeing for a Dutch book on solidarity and modernization values using the EVS-2008 data (Halman & Sieben, 2011). I hesitated initially because as an economist, the subject of values was not very familiar to me. But, it goes without saying that a request of Mr. EVS himself – who happens to be also an excellent researcher and a very nice colleague for a long time – could not be rejected. The substance, quality and richness of the EVS tempted me to write a chapter on the impact of values on subjective wellbeing (SWB) with the title: ‘If money does not make one happy, what does?’ (Muffels, 2011). It was based on the Dutch data of the 2008 wave and it showed that values matter for people’s SWB even after controlling for income at individual and national level (GDP). One year later, Wil Arts and Loek Halman asked me to redo that chapter but based on all countries in the 2008 wave and now for an international volume (Muffels et al., 2014).

At the time of writing of these two chapters, the second Atlas of European Values came out in 2011 with the title: “Trends and Traditions at the turn of the Century” (Halman et al., 2011). In the text of the Atlas, it was stated that: “happiness is higher in nations characterized by the rule of law, freedom, civil society, cultural diversity and modernity (schooling, technology, urbanization). Together with material comfort, these factors explain almost all differences in happiness across nations”. This heroic claim suggested that along with socio-economic factors, values cannot be denied as an important explanation of SWB differences across nations. The former analyses I had done provided supporting evidence on this claim.

When I was therefore asked by the editors of this Liber Amicorum for Loek Halman to write a chapter,1 it appeared obvious to redo the earlier work but including the 2017 data and taking a longer time frame. I address two simple questions, namely firstly whether the effects of values on SWB found in 2008 are confirmed for the entire 20-year period (1999-2017) using data for 47 countries, and secondly whether the effects of values on SWB change over time. I will first sketch my ideas and methodology. Eventually, I will discuss the updated results and draw some conclusions.


23.2 Existing Literature

I examine the relationship between values and SWB from a modernization perspective which is a very common approach in values studies (cf. Halman & Gelissen, 2019). The basic idea is to view the effects of objective modernization (socio-economic development or economic welfare indicated by GDP, absolute and relative income and income inequality) and subjective modernization (modernization values, including work and social values) on SWB using the EVS data over the last 20 years.

Socio-economic Development

The idea that income or GDP levels matter for nation’s levels of subjective wellbeing is generally accepted although questioned in Easterlin’s paradox (1974). He suggested that money does not pay off for wellbeing because beyond a certain level of GDP per capita people in wealthier nations are not better off on SWB than people in less wealthy nations (Easterlin 1974; 2003). The Easterlin paradox is explained by habituation or adaptation according to which people are presumed to be in a sort of ‘hedonic treadmill’: due to rising aspirations, increases in wealth do not lead to similar increases in SWB. The paradox has been disputed in various papers (Hagerty & Veenhoven, 2003; d’Ambrosio et al., 2020) suggesting that money matters for SWB at least up to a certain threshold (Kahneman & Deaton, 2010).

Not only absolute income matters for SWB, but also relative income, low income and income inequality (Stevensson & Wolfers, 2008). The lower the relative income and the longer the poor income status lasts the larger the negative effects on SWB (e.g Clark et al., 2016). The reason to include relative income is the alleged impact of ‘Keeping up with the Joneses’. People tend to compare themselves with their peers or colleagues and judge their own SWB in response to that (see e.g Kapteyn, 1977). Nobel laureate Daniel Kahneman speaks therefore of income for happiness as ‘a focusing illusion’ (Kahneman et al., 2006). Eventually, though not uncontested, as shown in the seminal 2009 book of Wilkinson and Pickett (2010), a negative relationship was found across nations between income inequality and SWB.

Values and SWB

According to Halman and Sieben (2020), in sociology, “values are the social standards or criteria that can serve as selection principles to determine a choice between alternative ways of action”. In other words, values are commonly shared guiding principles for social behavior. They then discuss related concepts in other disciplines. In economics, a service or good that delivers utility to people is of value because it meets individual preferences, which guide economic behavior. In psychology personal values are “regarded as motivations for behavior” and hence, associated with the attainment of “life goals”, or the things you want to achieve in life (Headey et al 2010). Trust in other people is considered one of the personality traits in psychology but also one of the values in sociology. Halman and Sieben (2020) also refer to ancient Greek philosophy, to Plato’s ideas about the “good”, the virtues of Aristotle for living a good life and the Stoicism school on “virtue ethics”, in which “virtue is the only good” for human beings to achieve eudaimonic happiness. Values are not intrinsically good or bad: “they are more neutral, they do not necessarily lead to a better life, decency or happiness” (Halman and Sieben, 2020). The lessons I draw from this is first, that values are motivational drivers for social behavior and secondly, that values are tied to the notion of the “good life” and to happiness.

Nonetheless, research on SWB from a values perspective is apparently not very common in sociology apart from research on the association of social trust with SWB (Fukuyama, 1995; Helliwell, 2006, Helliwell et al., 2021). An exception is formed by the work of sociologist Ruut Veenhoven, who examined the relationship between post-materialist values and happiness (Veenhoven 2008). In psychology more work is done, notably on the relationship between the ten Schwartz values and subjective wellbeing (e.g Schwartz & Sortheix, 2018). Positive psychologists posit in their ‘authentic happiness theory’ that meaning and engagement in life (life orientations) are essential to happiness, providing support to the beneficial effects of strength of character, religion, volunteering and acts of kindness (altruism) for happiness (Sagiv & Schwartz, 2000; Diener & Seligman, 2004). Through analysing German panel data, Headey et al. (2010) show that changes in happiness levels are related to life goals and choices made in response to these. If one wants to live a spiritual and/or healthy life (life goal), or one invests in religious services attendance or in exercising, it clearly contributes to a happy life. If one wants to set up a family life, meet friends or spend leisure time with others – which are also considered social values – it increases one’s long-term happiness.

For work values which we consider part of modernization values, in sociology the focus has been on the relationship between work orientations and job satisfaction and to the meaning of work for people’s life. Work is considered an essential element of one’s social network, because of which the importance attached to work or work ethos might have a positive effect on SWB. In Kalleberg’s job satisfaction theory (1977), intrinsic work values refer to characteristics of a job which one finds important, such as autonomy in the job, responsibility, a skills match, and meeting people and extrinsic work values to pay, job security or promotion. In positive psychology, there is clear evidence on the effects of life goals related to work on SWB showing that people striving for material success such as success in a job or pay are less happy than people who attach less value to material goals (Diener and Seligman, 2004, Headey et al., 2010). In psychology, Deci and Ryan’s self-determination theory is well-known, stating that intrinsically motivated people engage in an activity because they find it enjoyable and interesting, demonstrating greater effectiveness and persistence in their behavior and improved well-being (Ryan et al., 1997). Hence, we suspect that intrinsic work values show a positive association with SWB and extrinsic work values a negative one.

An additional arguments comes from proponents of modernization theory, who believe that modernization brings about societal, political as well as cultural change. The claim is not uncontested as the proponents of the ‘persistence of traditional values’ thesis argue (Inglehart & Baker, 2000). In the modernization literature two dimensions of cultural change are distinguished, industrialization and post-industrialization. Industrialization causes a shift from traditional to secular-rational orientations in which the role of religion, religious beliefs and strong social norms become less central in life. In secular-rational societies adherence to religious and social norms has declined and shifted into support for values associated with individual striving and enlightened self-interest (cf. Inglehart & Welzel, 2005). Post-industrialization brings about emancipation from authority signaling a shift from survival values to individual or self-expression values and quality of life values. This shift is also delineated by Inglehart and others as a shift from materialism to post-materialism. Previous research indicates that societies emphasizing survival values generally have lower levels of subjective well-being than societies emphasizing self-expression and quality of life values (Inglehart et al., 2005).


23.3 Analytical Strategy

In this chapter, the effects of economic welfare and social and modernisation values on SWB are analysed. Economic welfare is measured with GDP, GDP growth and income inequality (GINI). Modernization values refer to (post-) materialism, work ethos and intrinsic or extrinsic work orientations, opinions on gender roles and religion. Social values refer to trust in other people and the importance of family and friends and how leisure time is valued. The analysis controls at personal level for absolute, relative and low income, age, bad health, gender but also religious services attendance and exercising or sports. Indices were created for SWB of which each was normalized ranging from 0 to 10. The effects were then estimated for income and the various values at individual and country level using (multi-level) regression models.

In the EVS people are asked about a wide range of values, attitudes, opinions and preferences. The EVS contains also information on people’s demographics, their income and socio-economic status. I made use of the 1999, 2008 and 2017 wave (165,.000 observations in 47 countries, 27 in 1999, 44 in 2008 and 35 in 2017).

The dependent variable subjective well-being is measured in the EVS by asking respondents about the extent in which they are satisfied with life as a whole, ranging from 1 to 10. GDP per capita and GDP growth are derived from the Worldbank database. Relative income is measured as the household income relative to the average income in the country. Low-income status is based on the 30% of all people in the three lowest income groups and the GINI-index is calculated from the EVS income data and rescaled to range from 0 to 10. We control for personal characteristics but also for well-known correlates of SWB, namely religion, religious services attendance and participation in sports.

On social values, the EVS contains questions on the importance people attach in life to family, friends and leisure. Trust in other people is based on the question “whether people would say that most people can be trusted or that you cannot be too careful in dealing with them”. On modernization values, first, egalitarian gender role values are measured by the respondent’s opinion on two statements: 1. Pre-school child suffers with working mother and 2. Women want a home and children. Next, on work values EVS contains a battery of questions on intrinsic and extrinsic work values and how people judge the importance of a particular aspect of their job as derived from Kalleberg (1977). Work ethos is measured by three questions: the extent by which people agree with the statement that ‘people who don’t work turn lazy’, that work is ‘a duty’ and ‘work should always come first, even if it means less spare time’. The other modernization values pertain to Inglehart’s four points post-materialist scale. Hence, three groups are constructed: a group of ‘pure materialists’, a ‘mixed group’ having materialist and post-materialist values and a third group of ‘pure post-materialists’.

The various indices and sub-indices for social values and modernization values, including work values, are based on the unweighted row mean scores of the underlying items. For each construct we initially performed factor analysis to research the dimensionality of the scale and the contribution of each item. A few items were removed to derive a scale that passes the threshold of reliability (alpha>.60). The scale was next normalized or rescaled to range from 0-10.2 This resulted in better comparability of the found effects. We estimated (multi-level) regression models to calculate the individual and country level effects of income and values on SWB.3


23.4 Results

In Figure 23.1, the results of two models are presented, one model with controls and all the income and values indicators combined, and one with only the controls, the incomes, and an overall index of values. For this overall index, all separate indicators were combined (see first row in Fig. 23.1). The index shows a significant and substantial effect on SWB (0.135). All income and values indicators appeared significant at 95% confidence level (p<0.05) except post-materialism and the Gini-inequality measure (p<0.1).4

Money seems to buy happiness, as the large effects of GDP per capita and absolute income on SWB shows. Income inequality in a country has a significant but small (at 90% level) negative effect on SWB independent from the level of GDP per capita. It confirms Wilkinson and Pickett’s results (2010) that people in wealthier societies are happier when the incomes are more equally distributed.5 Poor people are less happy and people with incomes below the average in society incur a happiness loss confirming the results of other studies and supporting the relative income thesis (Ferrer-i-Carbonell, 2005; Layard, 2005).

But, more important here is the finding that values matter for subjective wellbeing and that the effect sizes are sometimes rather large, notably for social trust (0.4) and social values (0.14). Notice also the negative and quite large effect of the value people attach to pay (-0.10) and extrinsic work values on SWB (-0.026). This is not unexpected knowing that success and monetary gain goals reduce happiness. Intrinsic work values and work ethos on the other hand increase people’s SWB. Workers gain happiness from the perceived added-value of working (for the unemployed negative effects are found) and for having an interesting and challenging job, learning new skills and meeting colleagues at work. The effects of modernisation values such as (mixed) post-materialism, gender egalitarian and religious values are significant but modest in size.

Figure 23.1 Estimated effects of incomes and values on SWB

Source: EVS 1999-2017

Note: Estimated effects of incomes and values on SWB plus 95% confidence intervals from various random intercepts multi-level regression models, EVS waves 1999, 2008 and 2017, N=165,508 observations in 47 countries. Controls are age, age squared, age cubed, female, education level, marital status, employment status, exercising and religious services attendance.

The second research question concerns changes in the effects of values on SWB over time. Only the 24 countries who participated in all three waves were selected for studying the effects in each wave. The effects of social values on SWB are rather stable as are the effects of modernisation values, such as on gender and religion. But, the effects of trust and intrinsic work values apparently increase.6


23.5 Conclusions

The results from the EVS data tell again a very clear story about the relationship between incomes, values and SWB. Absolute as well as relative income and low income matters to SWB. People are also happier in more equal societies but the effects of inequality are small and much smaller than for the other income measures. The findings illustrate once more the strong effects of absolute and relative income for people’s happiness probably because it shapes the social relationships between people. However, what is allegedly more interesting is the strong effects of work and social values on SWB and the smaller but significant effects of all modernisation values which appear rather stable over time. Work ethos and intrinsic work values show a positive and extrinsic work values a negative effect. Strong effects on SWB are found for trust in other people (0.4) that also increases over time, and for the importance people attach to their family and friends (0.16). People who hold strong social values gain in happiness because they engage more in social networks and relationships.

Loek Halman will be in his ‘third age’ when he receives this Liber Amicorum. From the literature and the analyses here, we know that there are negative effects of ‘second age’ and positive effects of ‘third age’ (age cubed) on SWB. With EVS as his child, that also brings along a strong social network, I wish and foresee for Loek a productive and happy third life.

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