Martin Schröder

Here I present new research findings in a way that is accessible for everyone. Please feel free to comment!

Month: July, 2017

Does inequality make people unhappy?

In every society, some have more income than others. In some societies, some have much more income than others. But are people that live in more equal societies happier with their life? The prevailing view is that income inequality breeds unhappiness.

But does someone from Sweden really wake up in the morning to thank god that she does not live in a country with more inequality? Probably not… Indeed, empirical studies that compare whether countries with more inequality have a happier population showed mixed results. Some found that indeed, countries with more inequality have a more satisfied population. But others found the opposite: countries with more inequality actually have a MORE satisfied population. Go figure.

I think that the problem of existing studies is that they compare countries. They can show whether a country that is more equal than another country also has a happier population. But this is not how it works. We do not compare our inequality to some other country, we compare what we experience now to how what we have come used to from our own country. Using data from the World Values Survey, the British Household Panel Study, the Australian panel study of Household Income and Labour Dynamics, the Korean Labor and Income Panel, the Russian Longitudinal Monitoring study, the Swiss Household Panel and the German Socio-Economic Panel, I can indeed show that people are less satisfied when inequality in their own country is higher than it used to be. But they are not more satisfied when they live in a country with less inequality than another country. The article just appeared in the Journal of Happiness Studies:


Inequality and trade unions as prey and predator

Imagine a population of wolves and sheep. Wolves eat sheep. The wolve population grows, as long as there are sheep. But once the wolves have eaten all the sheep, the wolves starve and die. When the wolves are gone, the sheep population can recover. This is a basic prey and predator model. Essentially, it shows how trade union power is linked to inequality, trade unions are the wolves and inequality is the sheep.

Using data from 12 countries over 100 years, I can show with my co-author Louis Chauvel that trade unions recruit more members after inequality has been high. Strong trade unions then fight inequality. But in doing so, they destroy what helped them to recruit members in the first place. Once they have managed to lower inequality, no one has an incentive to join a trade union anymore. Trade unions then lose members, so that inequality can eventually increase again. If this happens, eventually people have an interest to join trade unions again, and they do. So again you have trade unions fighting inequality, but by doing so sowing the seeds of their own demise. We thus found the following dynamic:

Inequality and trade unions

We found this dynamica characterizes the development of inequality and trade union membership in Australia (from 1950- 2010), Canada (1941-2010), Denmark (1870-2010), France (1905-2009), Germany (1891-1998), Italy (1974-2009), Japan (1947-2010), the Netherlands (1914-1999), Norway (1900-2008), Sweden (1903-2010), the UK (1918-2009) and the US (1917-2011). By showing this empirically, we reconceptualise the relationship between inequality and union density as a prey and predator model, where predators eat prey – unions destroy inequality, but thereby also destroy their own basis for survival. By empirically showing that trade union density and social inequality influence each other in this way over long periods, this article contributes shows how social problems get met by social reactions, but these reactions overshoot and they often come to late.

For the entire article, check out this address:

How we get used to income inequality

In a recent paper I wrote, I can show that when more income inequality exists in a country, people also start to accept more income inequality. This means that when inequality increases in a country, after 3 to 4 years, people have adapted their social justice views to this and have accepted the increased inequality. This shows why people are not more outraged by rising inequality, they simply seem to have a strong tendency to get used to it. For the article, please access this link: