Objective: Scholars disagree on whether income inequality has incentive or disincentive effects. In the present research, we move beyond such debate and focus on the motivational processes that income inequality predicts. First, income inequality makes economic stratification salient; therefore, it should promote perceived competitiveness. Second, competitiveness can be appraised as both a challenge and a threat; therefore, it should promote both approach and avoidance motivation.
Method: In three studies (N = 2,543), U.S. residents from various ZIP codes reported the extent to which they perceived competitiveness in their town/city (Studies 1–3), as well as their economic achievement goals, achievement motives, and self-regulatory foci (Studies 2–3).
Results: Level of local income inequality was found to be a positive predictor—via increased perceived competitiveness—of other‐approach economic goals, need for achievement, and promotion focus, as well as other‐avoidance economic goals, fear of failure (specifically, the shame/embarrassment component), and prevention focus. Furthermore, actual and perceived income inequality were positively correlated.
Conclusions: The conceptual and empirical work herein is the first to show how the economic environment predicts individuals’ perceptions of competitiveness, influencing personal goals, motives, and orientations. It provides a more nuanced perspective on the implications of income inequality than perspectives currently available.