Perceived Economic Inequality and Life Satisfaction: Evidence from a Survey Experiment

Abstract This paper examines the causal effect of perceived economic inequality on life satisfaction. Using a randomized online survey experiment conducted in Hungary, respondents were assigned to a control group or to one of two treatment groups that read short news excerpts presenting factual information about economic inequality in Hungary as either relatively low and decreasing or high and increasing. The results show that exposure to information about high and rising inequality reduced reported life satisfaction, while information about relatively low and declining inequality had a smaller and statistically insignificant negative effect. Further analyses reveal pronounced heterogeneity: the negative effects of inequality-related information are concentrated among individuals with lower socioeconomic status, whereas effects are close to zero among higher-income and higher-educated respondents. An examination of potential mechanisms indicates that subjective social status is the main mediating pathway, accounting for approximately half of the total effect, while the sizeable direct effect suggests that additional cognitive and affective pathways are also likely involved. Overall, the findings provide experimental evidence that perceptions of economic inequality can causally affect subjective well-being, underscoring the importance of perception-based mechanisms in the inequality–well-being relationship.