Progressive taxation is associated with increased subjective well-being of nations. The study used data from 60,000 respondents in 132 countries and found that nations with more progressive taxation, where high earners pay higher tax rates than low earners, had citizens who evaluated their lives more positively and experienced more positive emotions. This link was mediated by citizens' higher satisfaction with public goods like education and transportation funded by progressively collected tax revenue. The findings provide evidence consistent with Rawls' theory of justice that redistributing wealth through taxation to provide equal opportunities increases societal well-being.

1. Progressive Taxation
and the Subjective Well-
Being of Nations
By
Daniyal Malik
Raja Abdar Rahman

2. Authors
• Shigehiro Oishi, Ulrich Schimmack, and Ed Diener
• Department of Psychology, University of Virginia
• Department of Psychology, University of Toronto,
Mississauga
• Department of Psychology, University of Illinois

3. Introduction
• Using data from the Gallup World Poll
• Progressive taxation is associated with increased levels of
subjective well-being.
• Consistent with Rawls’s theory of justice.
• Results – progressive taxation was positively associated
with the subjective well-being of nations.
• Found respondents living in a nation with more-progressive
taxation evaluated their lives as closer to the best possible
life and reported having more positive and less negative
daily experiences than did respondents living in a nation
with less progressive taxation.
• More-progressive taxation and higher levels of subjective
well-being was mediated by citizens’ satisfaction with
public goods, such as education and public transportation.

4. Rawl’s Theory
• John Rawls (1971/1999)
• Argued that a good society redistributes its wealth so
that all its citizens have the same opportunity for future
success.
• Said , progressive taxation is a more just policy than flat
taxation.
• We examined whether progressive taxation is associated
with the subjective well-being of nations, and if so,
whether this link is explained by citizens’ satisfaction
with public and common goods, such as public
transportation, the school system, health care, roads
and highways, good affordable housing, and air and
water quality.

5. Data Collection
• Survey
• 132 countries, 60,000 respondents
• Subjective well-being was assessed for each nation using three
types of items:
 Global-life-evaluation index was obtained using Cantril’s (1965) Self-
Anchoring Striving Scale, evaluate current life on a scale ranging
from 0 to 10.
 Positivity of daily experiences was assessed by taking the mean of all
answers (1 = yes, 0 = no) to the following 10 items: “Did you smile or
laugh a lot yesterday?” “Were you proud of something you did
yesterday?” “Did you learn or do something interesting yesterday?”
“Did you feel enjoyment during a lot of the day yesterday?” “Did you
feel love during a lot of the day yesterday?” “Would you like to have
more days just like yesterday?” “Did you feel well-rested yesterday?”
“Were you treated with respect all day yesterday?” “Were you able to
choose how you spent your time all day yesterday?” and “Did you
have good tasting food to eat yesterday?”
• Negativity of the day.

6. Contd.
• Calculated “effective” progressive taxation indices by
taking the difference between the effective tax rates for
individuals whose earning was 67% of the national
average and individuals whose earning was 167% of the
national average.
• Tax rates differ depending on family types.
• Share of GDP - general government consumption
spending for 69 nations from Bjørnskov et al. (2007).
The 2007 per capita GDP data for each nation were
taken from the World Development Indicators, online
database.
• Each nation’s income inequality index (Gini coefficient)
from the 2007 World Factbook (Central Intelligence
Agency, 2007).

7. Results

8. Results

9. Results
• Nations with more-progressive taxation were higher in
global life evaluation and positivity of daily experiences
and lower in negativity of daily experiences than nations
with less-progressive taxation.
• Explanation for the link between progressive taxation
and the subjective well-being of nations is that nations
with more-progressive taxation have higher overall rates
of taxation, and their governments spend more money on
various services than governments of nations with less-
progressive taxation.
• Citizens of nations with more-progressive taxation were
on average more satisfied with their lives, had more
positive daily experiences, and had fewer negative daily
experiences than citizens of nations with less-progressive
taxation (Reason Public Goods).

10. Nation Level Mediation Analyses:
Bias-corrected bootstrap

11. Multilevel Mediation Analysis
• Within-nations variation.
• Individual-level variables: income and marital status,

12. Results
• Residents of nations with a more-progressive taxation
policy reported higher levels of subjective well-being on
average than residents of nations with a less-progressive
taxation policy
• More-progressive taxation was consistently associated
with higher levels of national subjective well-being, the
tax rate for average earners and government spending
were not
• The tax policy that aims at a fair redistribution of
wealth, not large government spending
• A key to a happy society is quality public and common
goods

13. Discussion
• A fair redistribution of wealth via progressive taxation
increases the mean happiness of a nation’s citizens
• Interpretation is still vulnerable to a third-variable
account
• Whether a change toward more-progressive taxation in
nations will result in a higher average level of subjective
well-being
• Optimal level of taxation for the happiness of a nation’s
citizens, as after a certain point, more-progressive
taxation might not be associated with higher levels of
subjective well-being.

14. Discussion
Finally, it should be noted that a taxation policy that
works in one nation might not work in another nation