Economic inequality is linked to biased self-perception

A common view is that westerners are more likely to be individualists who seek personal success and uniqueness, and thus self-enhance - (i.e. emphasize or exaggerate one’s desirable qualities relative to other people’s) - more than do Easterners, who are more likely to be collectivists seeking interpersonal harmony and belonging. An international group of collaborators proposes an alternative explanation that favors socioeconomic differences over cultural dimensions. They suggest that the extent to which people engage in biased self-perception is influenced by the economic structure of their society, specifically its level of economic inequality. They gathered data from 1,625 participants in five continents and 15 nations: Europe (Belgium, Estonia, Germany, Hungary, Italy, Spain), the Americas (Peru, the United States, Venezuela), Asia (China, Japan, Singapore, South Korea), Africa (South Africa), and Oceania (Australia). Participants completed a standard questionnaire assessing self-enhancement. The bottom line is that people in societies with more income inequality tend to view themselves as superior to others, and people in societies with less income inequality tend to see themselves as more similar to their peers.
Their abstract:

People’s self-perception biases often lead them to see themselves as better than the average person (a phenomenon known as self-enhancement). This bias varies across cultures, and variations are typically explained using cultural variables, such as individualism versus collectivism. We propose that socioeconomic differences among societies—specifically, relative levels of economic inequality—play an important but unrecognized role in how people evaluate themselves. Evidence for self-enhancement was found in 15 diverse nations, but the magnitude of the bias varied. Greater self-enhancement was found in societies with more income inequality, and income inequality predicted cross-cultural differences in self-enhancement better than did individualism/collectivism. These results indicate that macrosocial differences in the distribution of economic goods are linked to microsocial processes of perceiving the self.

Figure: Scatter plot (with best-fitting regression line) showing self-enhancement (as indexed by beta weights from a two-level model) as a function of economic inequality (as indexed by the Gini coefficient) across nations. The data points for Australia and Italy are very close and overlap on the graph.

A bit from their discussion:

It is unlikely that economic inequality directly leads to biased self-perception. It seems more likely that there are intervening factors that result from socioeconomic differences. One possibility ... is perceived competition. When benefits and costs are polarized by inequality, people may compete for social superiority. One manifestation of this drive may be the presentation of the self as superior through self-enhancement. Thus, it may be the competitiveness triggered by economic inequality that drives biased self-perception. It is interesting to note that competitiveness may be related to differences in individualism as well, with more individualistic societies also fostering greater competition. Both individualism and economic inequality may work in concert to foster a perception of competition that results in cultural differences in levels of self-enhancement.1 Likewise, both individualism and economic inequality may undermine the norm of modesty. Modesty norms play an important role in reducing self-enhancement, and when they are compromised, self-enhancement increases. In societies with more income equality, people may not only have more-equal incomes, but they may also feel a pressure to seem more similar to others. This may manifest as a modesty norm, whereby people are discouraged from voicing both real and perceived superiority. Understanding the relationship between socioeconomic structure and individual psychology can help bridge the gulf between large-scale sociological studies of societies and individual social and psychological functioning.

An important limitation of the study was that, except for the United States, participants were drawn from university populations, and university students might often find themselves in situations in which their social standing is actually better than the average person’s, an effect which would be more pronounced in societies with more income inequality.