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

Abstract

Despite extensive research, the relationship between income inequality and life satisfaction remains unclear, with some countries experiencing negative consequences, while others show neutral or positive outcomes. Using data from the Gallup World Poll (2006-2022) with nearly two million respondents from more than 110 countries, we disentangle the distinct within-country and between-country effects of inequality. Our multilevel analyses reveal a significant within-country effect: Temporal increases in inequality are associated with decreases in life satisfaction. At the between-country level, power distance-a cultural dimension reflecting tolerance for social disparities-moderates the relationship. In low power distance countries, higher inequality strongly predicts lower life satisfaction, whereas in high power distance countries, the effect is nonsignificant. These findings are robust across two measures of income inequality and controls for wealth and individualism, offering a refined methodological and cultural interpretation to resolve inconsistencies in prior cross-national research.

Keywords: Gallup World Poll; economic inequality; hybrid regressions; income inequality; life satisfaction; power distance.