Income inequality affects the psychological health of only the people facing scarcity

TitleIncome inequality affects the psychological health of only the people facing scarcity
Publication TypeJournal Article
Year of Publication2018
AuthorsSommet, N, Morselli, D, Spini, D
JournalPsychological Science
ISSN0956-7976, 1467-9280

Following the status-anxiety hypothesis, the psychological consequences of income inequality should be particularly severe for economically vulnerable individuals. Oddly, however, income inequality is often found to affect vulnerable low-income and advantaged high-income groups equally. We argue that economic vulnerability is better captured by a financial-scarcity measure and hypothesize that income inequality primarily impairs the psychological health of people facing scarcity. First, repeated cross-sectional international data (from the World Values Survey: 146,034 participants; 105 country waves) revealed that the within-country effect of national income inequality on feelings of unhappiness was limited to individuals facing scarcity (≈25% of the World Values Survey population). Second, longitudinal national data (Swiss Household Panel: 14,790 participants; 15,595 municipality years) revealed that the within-life-course effect of local income inequality on psychological health problems was also limited to these individuals (< 10% of the Swiss population). Income inequality by itself may not be a problem for psychological health but, rather, may be a catalyst for the consequences of financial scarcity.