Subjective Inequity Aversion: How Perceived Unfair Inequality Affects Subjective Well-being

Abstract Combining theoretical insights from social justice literature and social comparison research, this paper argues that subjective perceptions of inequity (i.e., unfairness), rather than objective deviations from equality, are key to understanding the relationship between (in)equality and subjective well-being. To test this hypothesis, we analyze the association between respondents’ perceived fairness of own, top, and bottom incomes with subjective well-being using data from the European Social Survey 2018. Results from spline regressions indicate that perceived injustice of own and top incomes is negatively related to subjective well-being even when accounting for individuals’ relative income positions and objective macro-level inequality. However, we find no substantive relationship between perceived unfairness of bottom incomes and subjective well-being. These findings are consistent across several robustness checks and when using German panel data to test the effect of own income fairness on subjective well-being in a longitudinal setting. Overall, our results underscore the importance of integrating theoretical insights emphasizing normative and comparative social mechanisms as our results suggest that injustice for oneself hurts more than injustice for others and individuals experience greater discomfort when they believe the rich have too much than when they think the poor have too little.