Does the life satisfaction depend on self-perceived social stratification: Evidence from Azerbaijan

The relationship between income and life satisfaction, as well as income inequality and the well-being of individuals, have been examined extensively in the current literature. Empirical studies do not result in an unambiguous association between income and life satisfaction considering absolute, relative, and ranking income hypotheses. The current study aims to examine this association in a different context, considering self-perceived social class stratification by individuals. Employing a survey dataset (N = 2123, n_male=1092, n_female=1031, Mean_age=34.37) and multi-categorical dummy variable approach within polynomial regression analyses, we estimate the return of higher self-perceived social class stratification to individuals' life satisfaction. Estimations present evidence of positive return up to upper-income category, higher at lower social classes and slightly decreases towards higher social class stratifications. However, findings reveal that individuals belonging themselves to the upper-income category are significantly less satisfied with life compared to higher middle-income category participants. The results are robust and do not significantly vary when individual-specific factors are added to the models. Findings remind the potential role of using progressive taxation in Azerbaijan to enhance the overall well-being of society. Research results may have certain policy implications for public policy-makers in Azerbaijan.