The decomposition of well-being categories: An application to Germany

In the paper, a combined approach is used to test for inequality differences of several well-being categories for a number of groups of persons. Hereby, total inequality is decomposed into within- and into between-group/category inequality (via a normalised coefficient of variation as the used inequality indicator). The decompositions are categorised into those referring to socio-demographic characteristics (age, sex, nationality, place of residence, household type) and those belonging to different well-being (sub-)categories (several income, wealth, and expenditure categories). Based on the methodical setting, empirical analyses are performed for Germany using the 2008 German Sample Survey of Income and Expenditure (Einkommens- und Verbrauchs-stichprobe; EVS) as the database. Out of our numerous findings for both kinds of decomposi-tion, the overwhelming role of within-group/category inequality becomes evident. By decomposing German (material) well-being inequality in great detail, we shed light on its dimensions, showing that decomposition by income, wealth, and expenditure, as well as by socio-demographic characteristics is important to obtain adequate solutions for socio-political measures. Not considering the fact, from where the real inequality stems from, is like barking up the wrong tree and bears the danger of false political measures regarding social and distributional policy.