Economic, Financial, and Political Crisis and Well-Being in the PIGS-Countries

Abstract

The research question in this article is threefold: To which degree is the financial crisis of 2008 and the subsequent recession associated with reduced well-being among people in the four hardest affected EURO countries? Are individual factors associated with reduced well-being the same in these countries? and Are lower socioeconomic groups more severely hit than the better off?. Data before the crisis are compared with data in 2013/2014 (EU-SILC [European Union Statistics on Income and Living Conditions] survey 2013) for Greece, Portugal, Ireland, and Spain. Finland is used as a reference category. Before control of individual characteristics, regressions demonstrate a small and mostly significant fall in average satisfaction with life in these countries, Portugal being an exception. According to the theory of capability and actual economic and political development, it was hypothesized that Greece—being the worst case in terms of economic development—may experience the greatest fall in life satisfaction. This hypothesis is not supported by the data. In fact, the strongest decline was found in Ireland. In particular, lack of political trust stands in Greece out as having an impact, while poor health is related to Ireland and unemployment to Portugal and Spain. Greatest socioeconomic inequality in life satisfaction was found in Portugal.