Income Inequality Affects the Psychological Health of Only the People Facing Scarcity

• Published in: Psychological science 2018-12, Vol.29 (12), p.1911-1921
• Main Authors: Sommet, Nicolas, Morselli, Davide, Spini, Dario
• Format: Article
• Language: English
• Subjects: Economic models; Health disparities; Health problems; Income inequality; Low income groups; Mental health; National income; Polls & surveys; Psychological well being; Scarcity; Vulnerability
• ISSN: 0956-7976; 1467-9280
• DOI: 10.1177/0956797618798620

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.