Being Poor & Feeling Rich? Income Positions between Perception and Reality in Europe

Increasing poverty and inequality are still features of modern societies and a key issue of social science research. But the extent and structure differs strongly depending on the theoretical and empirical assumptions made, i.e., whether individual welfare and social position is sufficiently measured by objective parameters or whether subjective perceptions must be considered as well. In general, the relationship between the attributed social position and the subjectively perceived position can be consistent or not. Deviations between attributed and perceived social positions are relevant not only in terms of affecting individuals’ real or potential opportunities for participation but are also an issue of importance for society and social policy, for instance, in the event of individuals who feel deprived even though their objective welfare position is rather favorable.

Against this background, the paper investigates the relationship between objective income positions and their subjective evaluation among the older population (50+ years) using data from the Survey of Health, Aging and Retirement in Europe (SHARE). The empirical results show that objective income positions can be congruent with or differ from subjective self-perceptions. Overall, the majority of elderly European households live in an objectively favorable income situation and are aware of this as well (well-being). In contrast, approximately one fifth of the elderly European population is characterized by deprivation in which a bad objective position goes hand in hand with a bad subjective evaluation. Moreover, almost one-third of the elderly surveyed display inconsistent objective and subjective welfare positions. However, the frequency of the satisfaction paradox and the dilemma varies widely across Europe. Further multivariate analyses investigated the causes of the two forms of non-congruence, namely, adaptation (satisfaction paradox) and dissonance (dissatisfaction dilemma) and identified in addition to socio-demographic and socio-economic determinants as well as social-psychological influences also structural variations explain country-specific differences.