In 1980, the average American CEO’s income was 40 times higher than that of the average worker. Today, it is well over 300 times higher.
A new study suggests this rising income inequality in the United States doesn’t just affect Americans’ pocketbooks; it affects their happiness. Over the past four decades, according to the study, the American people have been the least happy in years when there was the widest gap between rich and poor.
In the study, which will be published in an upcoming issue of Psychological Science, researchers examined 50,000 responses to the General Social Survey, which has tracked well-being in the United States since 1972. The researchers, led by Shigehiro Oishi of the University of Virginia, zeroed in on Americans’ levels of happiness between 1972 and 2008, along with their perceptions of how fair and trustworthy other people are. Oishi and his colleagues compared these responses both with participants’ reported household income over those years and with a U.S. Census measure of income inequality.
Consistent with previous studies, the results show that the American population as a whole is less happy in times of greater income inequality. However, this wasn’t true across all income brackets: Only low-income participants—people whose income placed them in the bottom 40 percent of the entire U.S. population—reported reduced happiness in times of greater inequality. For other Americans, inequality was not reliably linked to greater happiness or unhappiness.
But what sets this study apart from previous research is that the observed link between unhappiness and income inequality was traced to psychological factors, not simply economic ones. People weren’t unhappy just because their income was lower. Instead, the authors’ analysis revealed that greater inequality was linked to reductions in trust and perceived fairness—and it was drops in those attitudes that made people feel less happy.
This finding echoes other research linking fairness and trust to happiness.
“A sense of fairness and trust are associated with happiness perhaps because they are a building block of social relationships and community,” says Oishi, “and having satisfying social relationships is important [to happiness].”
In the study, Oishi and his colleagues argue that their results may explain why economic growth has not been accompanied by increases in happiness in the United States, unlike in other developed nations. The problem, they suggest, is that gains in national wealth in the U.S. haven’t been distributed equally, and this inequality has caused Americans’ happiness to suffer.
Still, the authors acknowledge that the changes in happiness they observed could be due to factors other than declines in trust and perceived fairness, such as satisfaction with one’s job or neighborhood, for which they didn’t account. They say more research is needed to flesh out the link between inequality and happiness.
For now, they write, this much is clear: “Americans are happier when national wealth is distributed more evenly than when it is distributed unevenly.
“If the ultimate goal of society is to make its citizens happy,” they add, “then it is desirable to consider policies that produce more income equality, fairness, and general trust.”