Opposing Effects of Economic Inequality Concentrated at the Top or Bottom of the Income Distribution on Subjective Well-Being

Prior studies commonly conceptualize economic inequality as income dispersion, predominantly operationalize it through the Gini coefficient—and find inconsistent results for the relationship to subjective well-being. We draw on prior research highlighting that two income distributions can have the same Gini coefficient but differ in where inequality is concentrated, and suggest that bottom-concentrated economic inequality (i.e., the ratio of the 50th to the 10th income percentile) and top-concentrated economic inequality (i.e., the ratio of the 95th to the 50th income percentile) have opposing effects on subjective well-being. We provide empirical support using zip-code level income ratios extracted from the American Community Survey matched to individual-level subjective well-being from the Gallup U.S. Poll (N = 573,025), which also reveals that these opposing effects are stronger for higher- than lower-income individuals. Where inequality is concentrated is thus crucial to understanding how economic inequality predicts subjective well-being and other outcomes of societal importance.