Title page

Contents

Abstract 3

1. Introduction 4

2. Related literature 10

2.1. Inequality and SWB 10

2.2. The role of fairness and mobility 11

2.3. Perceived vs. actual inequality 11

2.4. Perceived inequality and SWB 13

3. Conceptual framework and hypotheses development 14

4. Empirical framework 17

5. Methodological challenges and remedies 20

6. Data and variables 23

7. Results 27

7.1. Main results 27

7.2. Perceived mobility and fairness 31

8. Robustness checks and heterogeneity 34

8.1. Endogeneity 34

8.2. Reversibility 37

8.3. Model selection 39

8.4. Heterogeneity 42

9. Discussion and conclusion 44

References 48

Appendix 53

Table 1. Actual and perceived inequality in countries in the analysis sample 25

Table 2. The association between (perceived) inequality and life satisfaction 27

Table 3. The association between perceived inequality and life satisfaction, accounting for mobility and fairness 31

Table 4. The association between perceived inequality and life satisfaction, robustness checks 35

Table 5. The association between perceived inequality and life satisfaction, ordered probit and probit estimations 37

Table 6. The association between perceived inequality and life satisfaction, heterogeneity analysis 43

Figure 1. Specification Curve Analysis 41

Table A1. Variable definitions 53

Table A2. Determinants of perceived inequality 56

Table A3. Summary statistics, individual-level variables 58

Table A4. Additional summary statistics, individual-level variables 59

Table A5. Summary statistics, country-level control variables 60

Table A6. Full econometric output related to Table 2 60

Table A7. Instrumental variables regressions 63