# <u>Spatial differences</u>

Financial struggle and dissatisfaction with education have a stronger influence on the experienced welfare of urban residents,<sup>19</sup> who also derive greater utility from confidence in national institutions (Table 4, columns (7) and (8)). Personal health, tertiary education, part-time employment, social capital (both in terms of social support and socializing opportunities), and unemployment are significant correlates of SWB in the more developed South and Southeast, but not in the rest of the country, where subjective economic factors matter more for life satisfaction, along with some objective economic characteristics such as household income and economic inactivity. This is in ‐ line with Inglehart’s (2007) hypothesis that there is a shift from survival to self expression and post-materialistic values when a society economically progresses.

**Table 5. SWB, real income, and subjective economic indicators by SWB group**

|SWB group|Inflation-adjusted<br>average household<br>income per capita<br>(International$)|Income sufficiency<br>(1-4)|% Financial<br>struggle|% Satisfied with<br>standard of living|
|---|---|---|---|---|
|1 (4 or lower)|2279|2.1|43%|48%|
|2 (5)|2876|2.5|27%|63%|
|3 (6 or 7)|3726|2.8|17%|71%|
|4 (8)|4262|3.0|14%|83%|
|5 (9 or 10)|3586|2.9|20%|90%|

Source: GWP. Note: Groups are not equal quantiles – 14% of the respondents score a 4 or lower, 19% of the respondents score a 5, 28% of the respondents score a 6 or 7, 19% score an 8, and 21% of the respondents score a 9 or 10.

# _4.4. The evolution of SWB in the 2010s_

After rising for decades, Brazil’s SWB considerably deteriorated after 2014, when the economy contracted. The decline, computed as the difference in SWB between the post-crisis (2015-2020) and the pre-crisis period (2010-2014) and shown in Figure 5 by demographic group, was experienced by all socio-demographic groups, indicating that most Brazilians were affected by the economic malaise. However, the decline is significantly larger for men and less pronounced for young people (<30) and people living in urban areas. In addition, the decline was larger for people out of the workforce compared to the part-time employed, and for people living in the Northeast and the South, compared to those living in the Southeast. Other differences across groups are not statistically significant.

We use the Blinder-Oaxaca decomposition, shown in equation (2), to understand the main factors behind the plunge in SWB since 2015. The results, shown in Figure 6, suggest that the explained part of the decomposition accounts for more than 62% of the decline in SWB. _The decline is primarily associated with a deterioration in economic optimism and economic circumstances and a decrease in political trust, measured by perceptions about country’s leadership._ Table 6 shows that these aspects indeed deteriorated after 2014. The percentage of respondents experiencing financial struggle increased from 17% to 25% and the percentage of respondents satisfied with their standard of living decreased from 78% to 70%. Income decreased by almost 25%, while the percentage of respondents that reported being

> 19 One explanation for this difference is the larger inequality that exists in cities and the fact that people’s reference points of a good life are in part driven by the quality of life of others in their immediate environment. Education offers a way to climb the social ladder. In addition, the returns to education are likely to be higher in urban areas, which offer more opportunities (Cardoso et al., 2019).

22