The psychological consequences of income inequality

Abstract

In this paper, we review and integrate the contemporary literature on the societal effects of income inequality, drawing on social, personality, developmental, and organizational psychology, sociology, political science, economics, and public health. Living in highly unequal regimes is associated with both increased mistrust and increased anxiety about social status; these psychological mechanisms help explain some of the negative outcomes associated with income inequality, such as lower happiness, lower social cohesion, weaker morality, higher mortality, worse health, and weaker governance.

Income inequality and depression: a systematic review and meta‐analysis of the association and a scoping review of mechanisms

“…The first is the social comparison or status anxiety hypotheses 36 , which argue that comparing oneself to those who are better off in a highly unequal context creates feelings of social defeat or status anxiety 4,37 . In a similar vein, Walker et al 38 hypothesized feelings of withdrawal and shame experienced by those in lower social positions.…”

“…Income inequality therefore undermines social capital and social integration, promoting social isolation, alienation and loneliness. It also undermines perceptions of fairness (a component of trust) 37 . Ichida et al 40 confirmed the social capital hypothesis in Japan, showing that social capital (measured as social trust) mediated the effect of inequality on self-rated health.…”

Challenges for Low‐Income Children in an Era of Increasing Income Inequality

“…For example, low‐income children are already more likely to encounter adverse school and neighborhood environments that are less predictable and more chaotic , a combination that can generate toxic stress and harm lifelong trajectories of social, emotional, and cognitive development . At the same time, low‐income children in high‐inequality settings may be less likely to receive supportive social policies and programs, as income inequality may reflect larger structural and social problems in a society that is “tilted against the poor” (, p. 2). While we know less about the psychological consequences of income inequality among children, the intensification of social hierarchies in high‐inequality settings suggests that children's psychological and physical outcomes may be harmed .…”

“…However, differences in parents’ investments of time and money between low‐ and high‐income families are large and have grown significantly in recent years . The greater tendency to make class‐based affiliations—that is, for people to distinguish themselves along class lines—in high‐inequality settings may be driving, at least in part, these diverging parental investments, behaviors, and norms across lower versus high‐income families.…”

Income inequality, perceived competitiveness, and approach‐avoidance motivation

“…Income inequality is then presumed to increase attention to markers of social success, to encourage hierarchical ideology, and to prompt status competition, which may lead individuals to develop pervasive concerns regarding their relative social position. Similarly, income inequality is purported by others to increase the salience of status differences, reinforce social norms of consumption, discourage values of reciprocity, and breed a culture of positional competition (Kawachi, Kennedy, Lochner, & Prothrow‐Stith, ; Kawachi & Subramanian, ; for a review on inequality and competition, see Buttrick & Oishi, ).…”