Bridging Structure and Perception: How Subjective Well-Being Mediates Trust in Institutions

The literature on institutional trust shows that objective individual characteristics—such as income, education, and age—have limited explanatory power. Instead, subjective perceptions and emotions appear to be stronger predictors of trust in democratic institutions. This paper investigates one psychological mechanism underlying this relationship by drawing on the Happiness Contract Theory, which posits that individuals evaluate institutional performance partly through their own subjective well-being (SWB). Specifically, I examine how the three components of SWB—positive affect, negative affect, and life satisfaction—mediate the influence of occupation and employment status on institutional trust. Using Dutch panel data, I examine cross-sectional associations between occupational status and trust levels. Second, I exploit exogenous life events—such as job loss—combined with individual- and wave-demeaned values to isolate within-person variation. Finally, I conduct Causal Mediation Analysis across societal subgroups defined by the socioeconomic characteristics analysed before. The findings show robust evidence that SWB components mediate the relationship between structural conditions and political trust: life satisfaction and the absence of positive affect are key mediators, while negative affect plays a limited role. These results advance our understanding of how the three components of subjective well-being channel structural inequality into trust judgments and shed light on the emotional foundations of political legitimacy.