Objective and Subjectively Experienced Financial Inequalities in Income and Wealth and Their Consequences

Research question/goal: 

Social inequality is a major theme in the current societal and political discourse. In particular financial inequality – the gap between the rich and the poor – has drawn substantive interest in research and public debates alike. A host of research linked financial inequality to various social problems and negative outcomes. The dominant methodological approach in this research is to look at correlations between an objective measure of financial inequality, such as the Gini index, and outcomes across countries or regions. Despite abundant research theorizing and let alone actual data about the underlying mediators are rare. Relatedly it is unclear how objective levels of inequality that correlate with negative outcomes across societies are represented individually. After all, both from a social psychological and a sociological perspective it is usually not the objective situation that influences individuals but how the objective situation is subjectively represented. The proposed research aims to fill this gap by investigating a) whether and how subjective representations of inequality relate to the various mediators proposed in previous research (e.g. trust, status competition, perceived fairness), b) the causal role of subjective as well as objective levels of inequality. In addition to measuring the respective concepts we will go beyond correlational studies and experimentally manipulate individuals’ subjective representations of inequality. Moreover, we plan to experimentally vary objective financial inequality in economic games in order to assess its causal impact on assumed mediators. Finally, we plan to link a large-scale survey for Germany with data on wages and employment histories and analyze the effects of objective and subjective inequality at the firm level as well as potential mediators on life satisfaction and health using longitudinal methods.

Current stage: 

Our first step was to investigate the role of subjective financial inequality in a cross-national study. The results clearly indicate that, over and above objective inequality, subjective inequality is systematically related to life satisfaction. Moreover, we have successfully conducted two experimental studies that address this causal relation. Currently, we are finalising a manuscript for submission to an international journal.

Fact sheet

Funding: 
DFG
Duration: 
2020 to 2024
Status: 
ongoing
Data Sources: 
Survey Data, experimental data
Geographic Space: 
The survey data will include worldwide data

Publications