Expectations, justice and life satisfaction: evidence from Europe

Abstract The literature on life satisfaction suggests, inter alia, that individuals respond to deviations from expectations and that fairness and justice are important for life satisfaction. This paper addresses the issue of whether pay lower than expectations is associated with diminished life satisfaction and whether this association is more pronounced when fairness and justice are perceived to be lacking. Using individual-level data from the 2010/11 European Social Survey (ESS) we proxy pay expectations with the fitted values from an extended mincerian wage equation and compare this to actual pay. We also use a self-reported measure of whether pay received is commensurate to the effort exercised. Through a series of ordered probits we look at whether the two measures of the deviation of pay from expectations are associated with life satisfaction and whether this association is stronger when the individual perceives that justice and fairness are not in general being served. Fairness is here proxied by the view individuals have about courts' workings. The reported results suggest that life satisfaction is lower in countries with a higher share of individuals perceiving courts to be unfair. The hypothesis that life satisfaction is associated with unfairness at the individual-level cannot be rejected either. In addition, dissatisfaction with pay appears to be negatively associated with life satisfaction and the association is stronger for individuals who perceive the justice system to be weak.