One of the well-known costs of inequality is that people withdraw from community life and are less likely to feel that they can trust others. This is partly a reflection of the way status anxiety makes us all more worried about how we are valued by others. Now that we can compare robust data for different countries, we can see not only what we knew intuitively — that inequality is divisive and socially corrosive — but that it also damages the individual psyche.

Our tendency to equate outward wealth with inner worth invokes deep psychological responses, feelings of dominance and subordination, superiority and inferiority. This affects the way we see and treat one another.

A few years ago, we published evidence that showed that in developed countries, major and minor mental illnesses were three times as common in societies where there were bigger income differences between rich and poor. In other words, an American is likely to know three times as many people with depression or anxiety problems as someone in Japan or Germany.

These differences are not a matter of awareness, definitions or access to treatment: To compare mental illness rates internationally, the World Health Organization asked people in each country about their mood, tiredness, agitation, concentration, sleeping patterns and self-confidence. These have been found to be good indicators of mental illness.

More recent studies have affirmed the pattern we found. One, looking at the 50 American states, discovered that after taking account of age, income and educational differences, depression was more common in states with greater income inequality. Another, which combined data from over 100 surveys in 26 countries, found that schizophrenia was about three times as common in more unequal societies as it was in more equal ones.

So what is happening?

In a study published in 2012, Sheri L. Johnson, a psychologist at the University of California, Berkeley, and colleagues reviewed a vast body of evidence from biological, behavioral and self-reported accounts, and concluded that a wide range of mental disorders might originate in a “dominance behavioral system.” This part of our evolved psychological makeup, almost universal in mammals, enables us to recognize and respond to social ranking systems based on hierarchy and power. One brain-imaging study discovered that there were particular areas of the brain and neural mechanisms dedicated to processing social rank.

Ms. Johnson concludes that psychiatric conditions like mania and narcissism are related to our striving for status and dominance, while disorders such as anxiety and depression may involve responses to the experience of subordination. Similarly, she suggests that the pressures of coping with social hierarchies may contribute to other conditions such as antisocial personality disorder and bipolarism.

If mental illness is related to dominance and subordination, you might assume that disorders like narcissism would be more common at the top of the social hierarchy while others, like depression, would occur more frequently at the bottom. The full picture, however, is more complicated.

It is true that depression is much more common lower down the social ladder, but it does exists at all levels: Few are immune to feelings of defeat or failure. Similarly, people can be narcissistic or strive for dominance anywhere in the hierarchy — although Paul Piff, also a psychologist at Berkeley, has shown that higher status is indeed associated with more unethical and narcissistic behavior.

Mr. Piff found that drivers of more expensive cars were less likely to give way to pedestrians or to other cars. Higher status people were also more likely to help themselves to candies that they had been told were intended for children. He found that they also had a greater sense of entitlement and were less generous.

So how does increasing inequality factor in? One of the important effects of wider income differences between rich and poor is to intensify the issues of dominance and subordination, and feelings of superiority and inferiority. Two sociologists at the University of Toronto, Robert Andersen and Josh Curtis, found that although there is always some connection between people’s income and the social class to which they feel they belong, the match between the two is closer in societies with bigger income differences between rich and poor.

Inequality not only intensifies the problem, but also makes it more extensive. A new study by Dublin-based researchers of 34,000 people in 31 countries found that in countries with bigger income differences, status anxiety was more common at all levels in the social hierarchy. Another international study, from 2011, found in particular that self-enhancement or self-aggrandizement — the tendency to present an inflated view of oneself — occurred much more frequently in more unequal societies.

In the United States, research psychologists have shown that narcissism rates, as measured by a standard academic tool known as the Narcissistic Personality Inventory, rose rapidly from the later 1980s, which would appear to track the increases in inequality. The data all point to the fact that as larger differences in material circumstances create greater social distances, feelings of superiority and inferiority increase. In short, growing inequality makes us all more neurotic about “image management” and how we are seen by others.

Humans instinctively know how to cooperate and create social ties, but we also know how to engage in status competition — how to be snobs and how to talk ourselves up. We use these alternative social strategies almost every day of our lives, but crucially, inequality shifts the balance between them.

It is hard to avoid the conclusion that we become less nice people in more unequal societies. But we are less nice and less happy: Greater inequality redoubles status anxiety, damaging our mental health and distorting our personalities — wherever we are on the social spectrum.

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