Power Distance Moderates the Relation Between Income Inequality and Life Satisfaction: A Cross-Country Longitudinal Analysis

Despite extensive research, the reasons why some countries experience negative consequences of income inequality on life satisfaction while others exhibit neutral or even positive outcomes remain ambiguous. By utilizing state-ofthe- art methodology for cross-country longitudinal data, the disaggregation of within- and between-country effects of income inequality effectively elucidates diverse processes operating at these distinct levels of analysis. Our study, spanning 2006 to 2022 and including 113 countries representative of all world regions, combines individual-level variables retrieved from the Gallup World Poll and country-level indicators obtained from various public databases. Multilevel analyses show a within-country effect of income inequality, with short-term increases over time associated to a lower life satisfaction in most countries. At the between-country level, power distance, a cultural dimension reflecting the extent to which a society tolerates disparities in social structures, offers an explanation for the contradictory relationship between income inequality and life satisfaction. In low power distance countries, characterized by a cultural aversion to inequality, higher levels of income inequality significantly predict lower life satisfaction. Conversely, in high power distance countries, where there is a cultural tendency to accept socioeconomic disparities among people, the effect of income inequality on life satisfaction is statistically null. The robustness of the results is supported by employing three different measures of income inequality and controlling for income at both the individual and country levels. We provide a solid methodological and cultural interpretation, above and beyond basic economic variables investigated in past research, for inconsistent previous findings reported in cross-national studies.