Income and neighbourhood-level inequality predict self-esteem and ethnic identity centrality through individual-and group-based relative deprivation: A multilevel path analysis

Although income and inequality (objective measures of deprivation and the distribution of income within a defined area, respectively) predict people's self-appraisals, the psychological mechanisms underlying these relationships are largely unknown. We address this oversight by predicting that feeling individually deprived (individual-based relative deprivation [IRD])a self-focused appraisalmediates the relationship between these two objective measures and self-esteem. Conversely, believing that one's group is deprived (group-based relative deprivation [GRD])a group-focused appraisalmediates the relationship between these two objective measures and ethnic identity centrality. We examined these predictions in a national sample of New Zealand adults (N=6349). As expected, income negatively correlated with IRD and GRD; in turn, IRD negatively correlated with self-esteem, and GRD positively correlated with ethnic identity centrality. Moreover, after accounting for between-level variability in income, neighbourhood-level inequality had indirect effects on self-esteem and ethnic identity centrality through IRD and GRD, respectively. Thus, income and inequality independently predicted self-esteem and strength of ingroup identification through distinct mechanisms. Copyright (c) 2015 John Wiley & Sons, Ltd.