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.