The Broken Ladder: How Inequality Affects the Way We Think, Live, and Die

Psychologists often use the idea of a 10-rung “Status Ladder” and ask people to place themselves on it. We would think that the richest, the best educated, and those with the best jobs would place themselves up high, but only 20% of people base self-evaluation of their status on their income, education, and job. In other words, there is a surprisingly small relationship between traditional markers of status and how people subjectively rate their status. Those who placed themselves low on the ladder were more likely to suffer from depression, anxiety, and chronic pain, and were more likely to have weight and health issues and a shorter lifespan. They were more likely to believe in conspiracy theories, make bad decisions, and perform poorly at work. Importantly, these things happen if you feel poor regardless of your actual income.

Most people feel as though their income is inadequate because we “make comparisons to other people so habitually that we rarely even notice that we are doing so” (13). Because these comparisons happen unconsciously, it causes blind spots, namely that people never admit that they crave status even though studies show that we do. Humans also constantly shift their standards for what counts as “enough” as their income changes and as they subconsciously compare to others. Payne writes, “Unlike the rigid columns of numbers that make up a bank ledger, status is always a moving target, because it is defined by ongoing comparisons to others” (14).

A problem that human society has always faced is how much inequality is too much. The most famous answer to this question comes from philosopher John Rawls, who constructed a thought experiment called the veil of ignorance. Rawls asked people to imagine they were on a spaceship and knew nothing about themselves. As the ship approaches the planet, you must choose which of the many societies, ranging from extreme inequality to egalitarianism, you will join, but you do not know what position you will occupy in the society you pick. Rawls states that any reasonable person would choose the egalitarian society, because even the worst possible outcome would be tolerable there. He argues that if people were simply asked about how much inequality was just or unjust, they would be biased by their own abilities, wealth, and self-interest. But by looking through this “veil of ignorance,” we can see that people prefer a just and equitable society.

A study aimed at testing Rawls’s theory asked Americans to estimate how much income each quintile of the population owned. The respondents recognized that there was inequality, but all vastly underestimated how bad it was. Similarly, when asked to describe an ideal world, the respondents listed a very (though not completely) egalitarian society. When subjects were then shown income distribution charts of both the US and Sweden and asked which was preferable, 92% of respondents chose the more equal Swedish one regardless of their wealth, gender, or political orientation. In other words, when put behind the veil of ignorance, people acted as Rawls predicted.

Overall, there is a mismatch between our slowly evolving appetites and our quickly changing environment, and this causes misery. For example, we strongly prefer fat and sugar because they were an evolutionary advantage for early humans. But in the modern world, where food is plentiful, this leads to obesity and heart disease. Similarly, there is a mismatch between our evolved yearning for status and our modern economic environment. For thousands of centuries we evolved to climb a Status Ladder that was only a few rungs high, but the modern Status Ladder is the size of a skyscraper. Our intrinsic desire for high status crashes into modern extreme inequality, and this has important consequences for both the poor and middle class. Because our response to inequality is shaped by our need for status, inequality is not about how much we have but how much we have compared to others. Feeling poor is what matters, not just being poor.

The answer to who is really rich and who is really poor is more complicated than it seems. This is because poverty and wealth are always relative to what other people have in a particular time and place. Our brains depend on expectations and context to perceive just about everything, including vision, hunger, and status. We are so accustomed to judging social status that it happens automatically and subconsciously, and we are quite good at quickly and intuitively perceiving the social status of others. When we think about someone superior to us, we feel worse, and vice versa. Consequently, “we can end up feeling inferior or superior without any awareness we were doing any comparing at all” (40).

We intuitively judge everything by relative comparison, assess others’ status at a glance, and crave to be higher on the Status Ladder. Combining all three results in “a recipe for a species that is incredible sensitive not simply to material wealth, but to inequality itself” (43). And our brains are bad at accurately judging whether we have “enough” of even basic things like food, so abstract judgments such as whether we have enough money or a nice enough house are shaped even more by these relative comparisons. What matters most for people’s happiness is their relative income—how much they make compared to the average person of their age and education in the same job.

Because relative comparisons are so important, the degree of inequality around us plays a key role in every area where wealth and poverty matter. At a global level, average income is strongly linked to life expectancy and susceptibility to social problems such as crime. But if you look just at wealthy developed countries, this link no longer holds because “once people are wealthy enough that their basic needs are met, additional income does not protect them from bad life outcomes” (45). What does matter is not income but inequality. The most unequal developed countries (the US, the UK, and Portugal) had more health and social problems, and the most equal (Sweden, Japan, and Norway) had fewer. This same study was applied to just the United States and found the same link: The most unequal states had the most problems, and the effect of inequality was much stronger than the effect of average income. Importantly, these effects of inequality are present even when you adjust for income. In other words, a middle-class person in a high-inequality place will suffer more health and social problems than a middle-class person in a low-inequality place.

It is easy for us to see what poverty and wealth look like, but it is much harder to see inequality. In practice, inequality means a lack of shared spaces because the haves and have-nots separate themselves from each other in terms of where they live, work, and go to school. Inequality affects not just the poor but everyone living in unequal areas because, from a psychological perspective, poverty and inequality are intertwined (not separate, as in the economic perspective). This is because we perceive our own wealth relative to our context, so our own subjective worth is never separate from the haves and have-nots around us.