You have probably seen headlines warning that economic inequality is on the rise and reaching extreme levels. For example, the wealthiest 1% now own more than half of all global wealth, and in Spain, women still earn around 18% less than men. These statistics reflect the most visible side of inequality—income and wealth gaps. However, inequality also carries a hidden cost that’s hard to see but deeply felt: it makes us less happy.
Why does living in an unequal society affect our well-being?
Economic inequality not only defines how much money people or how they live, it also shapes how we think, feel, and behave. Therefore, inequality influences how we interact with one another and the world around us. Research has shown that economic inequality is associated with lower levels of happiness and life satisfaction. Still, the psychological mechanisms that explain and moderate this association are underexplored.
Our team at Psychology of Social Problems Research Group from the Mind, Brain and Behavior Research Center (University of Granada) has been working to better understand whether, how, and under which circumstances economic inequality negatively affects people’s subjective well-being. We argue that perceptions and beliefs about economic inequality are key to understanding how living in an unequal society impacts our subjective well-being.
In a recently published paper, using data from a national survey conducted in Spain, we show that perceiving greater levels of economic inequality increases people’s anxiety about their social standing and reduces interpersonal trust, which in turn leads to lower levels of subjective well-being. In other words, perceiving economic inequality diminishes our sense of well-being by making us feel more insecure about our status and fearful that other people will take advantage of us.
We might think that the pernicious effects of inequality should be a problem only for the most disadvantaged people. However, this is not the case. The negative impact of inequality reaches everyone across the socioeconomic stratum. Economic inequality fosters social and psychological conditions that undermine our sense of fairness, cohesion, and well-being.
This is another hidden cost of economic inequality: It erodes the social tapestry of our society
Unequal societies foster competition rather than cooperation, deteriorate social relationships instead of promoting a sense of community, and tear us apart when we must join efforts to face global challenges.
So, what can we take from this? The answer is not to close our eyes and avoid thinking about inequality to feel better—it’s quite the opposite. We need to become more aware of inequality and increase our sense of urgency to take action against it. However, we can also work on the psychological mechanisms to overcome the pernicious effects of inequality that make us less happy. That means building closer relationships, engaging in public spaces with fellow citizens, and strengthening our identities as valuable community members. There is still a long way to go in this direction, but recognizing these hidden effects is a first step toward reducing the harmful effects of inequality while motivating us to work for a fairer society.
This project was conducted in Spain, and results were published in Social Indicators Research, a high-quality scientific journal focused on understanding how social conditions affect people's quality of life.
Reference
García-Sánchez, E., Matamoros-Lima, J., Moreno-Bella, E. et al. Perceived Economic Inequality Is Negatively Associated with Subjective Well-being through Status Anxiety and Social Trust. Soc Indic Res 172, 239–260 (2024). https://doi.org/10.1007/s11205-024-03306-x