Absolute standing is not irrelevant, and people will tolerate and sometimes even embrace inequality if they believe the system is fair and lets them get ahead. Still, the witticism (frequently attributed to Gore Vidal) that “it is not enough for me to succeed; others must fail” is uncomfortably accurate. In a striking experiment, certain households in Kenyan villages were randomly chosen to receive large financial windfalls. The lucky beneficiaries were pleased, of course, but their increased happiness was much more than offset by the increased unhappiness of other households, which lost nothing in absolute terms but suddenly saw themselves falling behind. Pondering the accumulated evidence, the British happiness economist Richard Layard concluded, “These studies provide clear evidence that a rise in other people’s income hurts your happiness.”
Inequality, in short, is immiserating. One could cite more evidence in the same vein. Places in the United States with more inequality have higher stress and worry, more political polarization and lower social connectedness, even among the wealthy. Moreover, what counts for subjective well-being is not just reality but also perception. If social media and reality TV disproportionately depict millionaires and amazing homes, or if talk-radio pundits insist that government takes from hard-working whites to subsidize lazy minorities, resentment grows, never mind what the statistics may say.