A recently published study, Life Satisfaction and Inequality in Slovakia: The Role of Income, Consumption, and Wealth, in the journal Social Indicators Research, examines how income, consumption, and wealth influence subjective perceptions of life satisfaction in Slovakia.
The study was conducted by Peter Tóth from the Faculty of National Economy and the National Bank of Slovakia, along with Biswajit Banerjee, also from the National Bank of Slovakia. The findings provide new insights into how different forms of economic inequality affect well-being.
We spoke with Peter Tóth about this topic.
First, according to economic theory, the level of consumption is closely related to utility, meaning a consumer's satisfaction.
Second, a portion of our income can be saved, allowing us to ensure future consumption and smooth out fluctuations in our future earnings. Saving in the present can therefore increase our sense of security and overall life satisfaction.
Third, wealth represents accumulated past savings. In Slovakia, where most household wealth consists of real estate, owning a home can directly increase personal well-being or even generate income. That’s why all three factors are crucial to understanding subjective life satisfaction.
Your study also examines economic inequality. How does inequality in income, consumption, and wealth differently impact subjective life satisfaction?
People can perceive inequality positively, seeing it as an opportunity for future income growth, or negatively, when they envy the higher well-being of others they compare themselves to.
In our study, we found both effects. We concluded that the impact of inequality depends significantly on how it is defined and measured.
When looking at overall inequality within different groups, we discovered that people are more troubled by inequalities in consumption and wealth, while they tend to perceive income inequality positively.
This may be related to the visibility of these components of economic well-being. While income comparisons are indirect, the consumption patterns and wealth levels of others are more easily observed.
Many people believe that higher income automatically leads to greater life satisfaction. What are the key findings of your research on this topic?
Our results confirm this relationship—more is always better. In the data, we did not find a threshold of material well-being beyond which people would stop becoming happier. This suggests that Slovakia's economic and social development has not yet reached such a level.
Your study provides important insights for policymakers. What measures could help increase life satisfaction in Slovakia?
Policymakers should focus on raising overall well-being while also being cautious to prevent excessive deepening of inequalities.
Do you plan to conduct further research in this area? If not, what topics will you focus on next?
This study was based on older data from the 2017 Household Finance and Consumption Survey. We plan to analyze the same topic using the latest data from the post-pandemic period.
In the near future, I also plan to study recent changes in VAT rates and analyze their impact on consumer prices and purchasing behavior.
About the Study
The article Life Satisfaction and Inequality in Slovakia: The Role of Income, Consumption, and Wealth was published in 2025 in the journal Social Indicators Research, which is classified as Category A in the prestigious ABDC journal ranking list. Category A represents the second-highest level of quality.
The full article can be accessed at this link: https://doi.org/10.1007/s11205-024-03491-9
Photo: Filip Gono
