Economic Inequality
Figure 1. The actual U.S. wealth distribution at the time of the survey in Norton and Ariely (2011) against respondents’ perception of inequality and ideal distribution.
4. Perceived Gap or Distribution. The International Social Survey Programme (ISSP) has examined perceptions of economic inequality through its “Social Inequality” module from 1987 to 2019 (ISSP, 2024). It includes two key measures: perceived gap, where respondents rate agreement with “Differences in income in [COUNTRY] are too large” (1 = Strongly agree, 5 = Strongly disagree), and perceived distribution, where respondents select from five diagrams depicting hypothetical income distributions (see Figure 2).
Figure 2. The ISSP question on social type with descriptions. Source: ISSP (2024)
5. Perceived Economic Inequality in Everyday Life (PEIEL; García-Castro et al., 2019). The PEIEL (12-item) measures of how individuals perceive inequality based on the people they frequently encounter or interact with (e.g., “I know people who can afford to save money and others who do not reach the end of the month,” “Among the people I know some cannot afford unforeseen expenses and others solve them without any difficulty”). The scale was developed in Spanish and has been validated, although the English version has not been validated. Both scale versions are provided in García-Castro et al. (2019).
6. Subjective Inequality Scale (SIS; Schmalor & Heine, 2021) and Perceived Economic Inquality Scale (SEIS; Valtorta et al., 2024). The SIS (8-item) captures individuals’ global sense of inequality in their society. It distinguishes between subjective inequality (perceptions that inequality exists; e.g., “Real opportunities to succeed in life are only available to the wealthy”) and unfairness beliefs (evaluative responses to inequality; e.g., “It is not fair at all if there are large differences in income between the rich and the poor”). The SIS has been validated across high-inequality countries (e.g., US, Canada), low-inequality countries (e.g., England, Sweden), and non-Western contexts (e.g., Japan, South Africa) (Schmalor & Heine, 2021).
The PEIS (7-item) measures the same two dimensions as the SIS, but explicitly anchors items to the respondent’s country (e.g., “In Italy, the real opportunities to succeed in life are only available to the wealthy”). This anchoring is argued to enhance validity.
​
Both the SIS and PEIS assess not only perceptions of inequality but also evaluative responses, specifically unfairness. Because unfairness is tied to moral emotions such as anger (Haidt, 2003), these measures also capture psychological stress-related processes.
7. Personal Relative Deprivation (PRD; Callan et al., 2011). The PRD (5-item) emphasizes individuals’ feeling of being socioeconomically worse off compared to relevant reference groups—a response that is especially likely to be elicited by perception of large economic gaps. It captures feelings of privilege, as well as negative emotional responses of deprivation, resentment and dissatisfaction—feelings that are also tied to unfair disadvantage and linked to psychological stress.
​​Existing Gaps in the Field
The current tools help illuminate the pathways through which inequality contributes to stress, from structural to psychological emotional responses. Nonetheless, some gaps remain in the field. First, few tools exist to reliably capture how individuals perceive inequality in everyday interactions (e.g., visual cues of gaps at work or school). The experiencing sampling method provides one promising way to capture such daily inequality and stress experiences. Second, economic inequality often intersects with inequalities based on other social group identities, such as gender and race. No existing measures can isolate the role of economic inequality, so measuring and controlling for other group-based inequalities are necessary for disentangling their effects.
​
Author(s) and Reviewer(s): Prepared by Jacinth Tan, PhD. Reviewed by Juan Diego García-Castro, PhD. Please direct suggestions and feedback to Dr. Tan (jacinthtan@smu.edu.sg).
​​​
Version September 2025.
​​
References
Buttrick, N. R., Heintzelman, S. J., & Oishi, S. (2017). Inequality and well-being. Current Opinion in Psychology, 18, 15–20. https://doi.org/10.1016/j.copsyc.2017.07.016
​
Buttrick, N. R., & Oishi, S. (2017). The psychological consequences of income inequality. Social and Personality Psychology Compass, 11(3), Article e12304. https://doi.org/10.1111/spc3.12304
​
Callan, M. J., Shead, N. W., & Olson, J. M. (2011). Personal relative deprivation, delay discounting, and gambling. Journal of Personality and Social Psychology, 101(5), 955–973. https://doi.org/10.1037/a0024778
​
Chambers, J. R., Swan, L. K., & Heesacker, M. (2014). Better off than we know: Distorted perceptions of incomes and income inequality in America. Psychological Science, 25(2), 613–618. https://doi.org/10.1177/0956797613504965
​
Cohen, S., & Wills, T. A. (1985). Stress, social support, and the buffering hypothesis. Psychological Bulletin, 98(2), 310–357. https://doi.org/10.1037/0033-2909.98.2.310
​
García-Castro, J. D., Willis, G. B., & Rodríguez-Bailón, R. (2019). I know people who can and who cannot: A measure of the perception of economic inequality in everyday life. The Social Science Journal, 56(4), 599–608. https://doi.org/10.1016/j.soscij.2018.09.008
​
Haidt, J. (2003). The moral emotions. In R. J. Davidson, K. R. Scherer, & H. H. Goldsmith (Eds.), Handbook of Affective Sciences. Oxford: Oxford University Press.(pp. 852-870).
​
Hauser, O. P., & Norton, M. I. (2017). (Mis)perceptions of inequality. Current Opinion in Psychology, 18, 21–25. https://doi.org/10.1016/j.copsyc.2017.07.024
​
ISSP Research Group (2024). International Social Survey Programme: Social Inequality I-V Cumulation. GESIS, Cologne. ZA8790 Data file Version 1.0.0, https://doi.org/10.4232/1.14226
​
Kiatpongsan, S., & Norton, M. I. (2014). How much (more) should CEOs make? A universal desire for more equal pay. Perspectives on Psychological Science, 9(6), 587–593. https://doi.org/10.1177/1745691614549773
​
Norton, M. I., & Ariely, D. (2011). Building a better America—One wealth quintile at a time. Perspectives on Psychological Science, 6(1), 9–12. https://doi.org/10.1177/1745691610393524
​
Pickett, K. E., & Wilkinson, R. G. (2015). Income inequality and health: A causal review. Social Science & Medicine, 128, 316–326. https://doi.org/10.1016/j.socscimed.2014.12.031
​
Schmalor, A., & Heine, S. J. (2022). The construct of subjective economic inequality. Social Psychological and Personality Science, 13(1), 210–219. https://doi.org/10.1177/1948550621996867
​
United Nations, Department of Economic and Social Affairs. (2015). Concepts of Inequality –Development issues (Policy Brief No. 1). United Nations. https://www.un.org/en/development/desa/policy/wess/wess_dev_issues/dsp_policy_01.pdf
​
Valtorta, R. R., Vezzoli, M., Mari, S., Durante, F., & Volpato, C. (2024). Measuring subjective inequality: Development and validation of the perceived economic inequality scale (PEIS). The Spanish Journal of Psychology, 27, e2. https://doi.org/10.1017/SJP.2024.4
Inequality refers to gaps in status, rights, and opportunities across social groups (UN DESA, 2015). Economic inequality in income and wealth is a major determinant of health and well-being, predicting poorer health, higher mortality (Pickett & Wilkinson, 2015), and lower subjective well-being (Buttrick et al., 2017).
As a stressor, inequality shapes biological, social, and psychological pathways. High inequality erodes social cohesion and trust, activating stress-related biological responses such as impaired immunity, hypertension, cardiovascular risk, and depression (Pickett & Wilkinson, 2015; Sapolsky, 2005). Reduced trust also weakens social connection and support as a stress buffer (Cohen & Wills, 1984). Psychologically, perceived inequality fosters relative deprivation, unfairness, anxiety, and resentment, amplifying stress (Buttrick & Oishi, 2017).
​
Background
Economic inequality can be conceptualized in terms of income/wealth gaps or distributions. Gaps capture the magnitude of difference between groups, such as the rich versus the poor. Distributions, on the other hand, describe how resources are spread across society as a whole.
Inequality can be measured objectively (income or wealth data) or subjectively (perceptions). Objective measures provide baselines, while subjective measures reflect lived experience. Research shows a weak alignment between the two: In 40+ nations, individuals underestimate actual inequality (Kiatpongsan & Norton, 2014; Norton & Ariely, 2011), and correlations with the Gini coefficient are modest (r = .17; Schmalor & Heine, 2021). Because lived experience is more psychologically salient than statistics, subjective inequality often better predicts psychological stress-related outcomes than objective measures (García-Castro et al., 2019; Hauser & Norton, 2021).
Measurement
Objective inequality measures are derived from national statistics that can be obtained from public databases, namely the World Bank (https://pip.worldbank.org/) or World Inequality Database (https://wid.world/data/). These indices offer robust tools for capturing inequality at the macrolevel and making cross-country comparisons. However, it is unclear if individuals are aware of or affected by such macrolevel disparities in their everyday lives.
1. Gini Coefficient. The Gini coefficient is a statistical measure of inequality ranging from 0 (perfect equality) to 1 (maximum inequality). It reflects the degree to which income or wealth distribution deviates from equality. Because it summarizes overall inequality in a single number, it is widely used in cross-national comparisons and policy evaluation. Its key limitation is that it obscures potential differences between top- and bottom-heavy distributions, and differences in inequality effects at different ends of the spectrum.
2. Income Ratios (80/20, 90/10, Palma ratio). These ratios compare income at the top (e.g., the 90th percentile) with income at the bottom (e.g., the 10th percentile). They provide an intuitive sense of the gap between the rich and poor. Such measures are easily communicable and directly relevant to perceptions of fairness, though they ignore what happens in the middle of the distribution. The Palma ratio focuses specifically on the income share of the richest 10% relative to the poorest 40%. Some argue that it is more sensitive to policy-relevant changes, as it focuses on groups most affected by redistributive measures.
Subjective inequality measures aim to capture direct “lived” experience of inequality, based on how individuals see and interpret disparities in their environment. These measures are highly adaptable across contexts of interest (e.g., workplace, school, specific social group). However, However, they may be influenced by response biases (e.g., affect or optimism/pessimism), common method bias from similar self-report measures, or immediate contextual cues (e.g., socioeconomic signals in the response setting).
3. Estimation Tasks. This approach asks respondents to estimate wealth or income distribution in their society, often with pie or bar charts, which presumably reflects their own perception and beliefs about existing inequality (Norton & Ariely, 2011; Chambers et al., 2014). It can also include estimates of ideal distributions, compared with actual data (see Figure 1). Over- or under-estimations reveal misperceptions that may fuel negative feelings and stress.