The Decomposition of Well-Being Dimensions: An Application to Germany

Abstract

In the wake of the Stiglitz Commission, we assess German economic well-being by considering income, wealth and consumption. A decomposition approach is used to test for corresponding inequality differences of these well-being dimensions. Total inequality is decomposed into within- and between-group inequality (via a normalised coefficient of variation). The decompositions are categorised into those that refer to socio-demographic characteristics (place of residence, age, household type) and those belonging to different well-being (sub-)categories (potential and net income, expenditure and wealth categories). The empirical analyses are performed for Germany using the 2008 German Sample Survey of Income and Expenditure. By decomposing German well-being inequality in great detail, we shed light on its dimensions. Our analyses illustrate that it is necessary to consider all well-being dimensions to make statements about the material well-being of private households or individuals.

Citation

Faik, J. and Fachinger, U. (2014), "The Decomposition of Well-Being Dimensions: An Application to Germany", Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting (Research on Economic Inequality, Vol. 22), Emerald Group Publishing Limited, Leeds, pp. 87-113. https://doi.org/10.1108/S1049-258520140000022002