Subjective economic inequality is associated with lower well‐being through more upward comparison and lower trust

Abstract Individuals often misconstrue the actual degree of economic inequality, which might account for the ambiguity in the literature about the role that inequality plays in well‐being. Instead of focusing on objective inequality, we propose a subjective inequality approach by investigating the long‐term association between subjective economic inequality and well‐being ( N = 613). We found that subjective inequality predicted lower life satisfaction and higher depression one year later, which were accounted for by more upward socioeconomic comparison and lower trust. Furthermore, the negative association between subjective inequality and well‐being remained constant, regardless of individuals' objective socioeconomic status (SES), subjective SES, and mindset of SES. The long‐term association between subjective inequality and well‐being remained robust after controlling for prior levels of well‐being and multiple covariates. Our findings revealed that subjective inequality is detrimental to well‐being and opens a new window into psychological research on economic inequality.