Perceived economic inequality is negatively associated with subjective well-being through status anxiety and social trust

Abstract

The relationship between economic inequality and subjective well-being has produced mixed results in the literature. Conflicting evidence may be due to overlooking the role of psychosocial processes that translate socioeconomic conditions into subjective evaluations. We argue that perceiving high economic inequality erodes social capital, undermining people’s subjective well-being. We rely on the Psychosocial Model of Perceived Economic Inequality and Subjective Well-Being (PEISW), which posits that perceived economic inequality negatively affects subjective well-being by increasing status anxiety and decreasing social trust. Furthermore, these indirect effects from perceived inequality to subjective well-being will be moderated by system-justifying ideologies. The present article provides the first empirical test of this model using a national survey from Spain (N = 1,536). We confirmed that perceived economic inequality is negatively associated with well-being. We also found that perceived economic inequality had an indirect negative effect on subjective well-being via increasing status anxiety and reducing social trust. We found no evidence that system-justifying ideologies (i.e., social dominance orientation) moderated the association between perceived economic inequality and subjective well-being. We discuss that perceived economic inequality is crucial to understanding the link between economic inequality and subjective well-being and elaborate on the role of psychosocial mechanisms that promote competition and undermine social cohesion.