Income Inequality and Well-Being

Abstract

Income inequality has risen drastically in recent decades. The question of whether income inequality is linked to subjective and physical well-being has gained increasing interest from various fields. This chapter reviews existing evidence and finds that income inequality is not consistently associated with greater or poorer well-being. The authors discuss how theoretical and methodological factors may have contributed to the heterogeneity in extant research. From a social comparison perspective, income inequality may not always lead to feelings of relative deprivation, and income differences may, in certain contexts, have positive associations with well-being. From a methodological standpoint, past research has used various operationalizations of income inequality, making comparisons across studies difficult. The authors point to new theoretical accounts and methodological improvements that may help future research to develop a deeper understanding of the associations between income inequality and well-being.