How detrimental are income inequalities to the human mind? Analyzing the protective functions of social justice perceptions in Germany and Chile

How to distribute scarce resources is a divisive topic. On the one hand, liberalists justify income inequality using principles of economic freedom and competition; on the other hand, egalitarians disapprove of social hierarchies based on economic power relations and favor distributive procedures based on equality and need. This paper asks how detrimental income inequalities really are for the individual, judging its value by its impact on life satisfaction experiences.  Unlike most studies in this field, it focuses on the perceiver (the individual) and tries to understand how the larger societal processes of (in)equality become subjective accounts of well-being, paying close attention to perceptions and judgments on social justice. 

Using data from the International Social Justice Project (2006), this study considers whether the distribution of monetary resources in Germany (N = 3,059) and Chile (N = 890) – two highly divers societies in terms of income inequality – makes a difference to an individual’s life satisfaction. Using structural equation modeling, the paper analyzes the mediatory nature of social justice perceptions, i.e., perceptions of the legitimacy of others’ incomes, social attribution patterns, and social mobility.

The results verify the mediatory function of social justice perceptions. If people perceive societal conditions to be unjust, they are also less satisfied with their own life. This holds surprisingly only for upper income groups. Perceptions of social mobility are, however, especially important for the life satisfaction of lower income groups. This paper concludes that income inequalities do not hurt individuals per se, but only if the individual perceives them as illegitimate. However, perceptions are often biased and judgments are often a product of self-interests and culturally induced preferences which need further theoretical and empirical consideration.