Psychology of Inequality: Explaining Irrational Thoughts and Behaviors

Author: Lily Davis

Income inequality is the extent to which income is distributed in an uneven manner within a population. In the United States, the gap between the rich and the rest of the population has been continuously growing for the past several decades. For example, in 1979 the top 10% of the U.S. population made a weekly wage of $1,479, while the bottom 10% made a weekly wage of $414. As of 2016, the top 10% of the US population had experienced a steady increase in weekly wages, making an average of around $2,000 per week. Despite this steady increase in the top 10% of the US population, the bottom 10% of the population remained fairly stable and even slightly decreased, making an average weekly income of $397 in 2016 (Bureau of Labor Statistics, 2016). Not only does there remain a gap between the highest earners of the U.S. population and the lowest earners, but the gap is continuing to grow.

The way our population thinks about inequality has a much larger impact on the issue than one may believe. The underlying psychological concepts associated with inequality often make people think, and act, in ways that are irrational or contradictory. For example, Shah et al. (2012) discusses the scarcity mindset, and why people in poverty often act in ways that reinforce poverty. This article suggests that when people are faced with scarcity, they choose the most convenient and practical response to pressing problems. This mindset leads people in poverty to only think about the present moment and not the long term. Scarcity often leads people to seek immediate rewards and payouts, despite the consequences it will have in the future, thus further reinforcing poverty.

In addition to making people act irrationally, inequality can make people think irrationally as well, whether they are conscious of it or not. In a Pacific Standard article by Jacobs, he highlights how the American ideal of freedom of choice is impacting the way we view inequality. Jacobs (2012) discusses several experiments related to choices and inequality, all of which found that participants who had been thinking about choice were less disturbed by examples of inequality than those in a neutral condition. For example, when a group of participants was given the task of either listing all of the choices they made in the past 24 hours or pressing a button every time they saw an actor make a decision in a video, they were more likely to rate statements about inequality favorably than individuals who had not been presented with the choice tasks (Jacobs, 2012). In another study, individuals were less likely to support programs aiding low-income students when they were first presented with various preferences and alternatives. These experiments show that we closely associate success with the choices we make in life. Since our successes are a combination of both the choices we make and various societal forces outside of our control, it is vital to keep these things in mind when thinking about poverty and inequality. Despite this fact, when we are presented with choices, we tend to forget or downplay the outside forces associated with success and only focus on the personal decisions that lead to either success or failure. This mindset then leads us to blame individuals for the situations they are in, without looking at outside factors.

Inequality is an ever-present issue within our society, thus psychologists have worked to understand the underlying concepts associated with it, from both the viewpoint of the minority and the majority. Having a clear understanding of these concepts can help us to combat inequality by acting and thinking in more clear, rational ways.

Jacobs, T. (2012). You choose, they lose: The psychology of income inequality. Pacific Standard.

Shah, A.K., Mullainathan S., & Shafir, E. (2012). Some consequences of having too little. Science, 338, 682-685.