In a study in Psychological Science a large (R=.79) correlation was found between self-enhancement as measured by higher ratings of your own abilities against others in your society and inequality, as measured by the Gini Index. In layman’s terms, economic inequality is associated with people talking big game about themselves.
Now this is a very large, interesting and impressive relationship -at least by the standards of social science- between two quite distinct variables. What caught my attention about it though was the implications for a possible relationship between happiness and inequality.
Previous research has found a modest negative relationship between inequality and happiness (meaning more inequality is associated with more unhappiness), but only a modest negative relationship:
But perhaps this isn’t the full story, perhaps the negative effect is stronger than it appears because something is hiding it- Self enhancement.
Let me explain. Presumably, rating yourself as happy is a form of self-enhancement, and the results we mentioned above suggest that even as inequality decreases happiness, it increases self-enhancement. This means the latter effect (higher self-enhancement in more unequal countries) partially conceals the former effect (lower happiness in more unequal countries). Simply put, inequality fashions unhappy but self-enhancing people, keen to make others believe they are happier than they really are- and this hides the depth of the relationship between unhappiness and inequality. This isn’t idle speculation- research suggests that self-enhancement leads people to exaggerate their well-being.
What we need then is research on the relationship between inequality and happiness between countries in which self-enhancement is controlled for. Until we have that research, it is reasonable to postulate that economic inequality is even worse for well-being than is commonly thought.