What You See is What You Get: The Effect of Perceived Inequality on Subjective Well-Being

Abstract When examining the influence of income inequality on subjective well-being (SWB), prior research has relied on objective measures of inequality, such as the Gini index. Alternatively, considering the subjective component, research has also investigated how evaluations of inequality, such as perceived (un-)fairness, influence SWB. However, we argue that it is important to also consider the perceived size of inequality independently from evaluations of inequality. Whereas the effect of evaluations of inequality on SWB have been the subject of prior research the effect of perceived size of inequality has received rather little attention. Across three studies, the present research suggests that the higher the perceived size of inequality the lower SWB, independent of evaluations of inequality. Study 1, a country level-analysis across 41 countries found that this relationship is stronger than and independent of objective inequality or unfairness beliefs about inequality and provides longitudinal evidence. Study 2, a representative survey study (N=836), found that the relationship between perceived size of income inequality and SWB is independent of unfairness beliefs about inequality. Study 3, a pre-registered experiment (N=302) manipulated perceived size of income inequality and found partial support for a causal impact on aspects of SWB. Overall, these results emphasize the importance of perceived size of inequality. This perspective holds important implications for explaining how income inequality impacts SWB.