A study of British civil servants showed that where people ranked themselves in terms of status was a better predictor of their health than their education level or their actual income was. ...thanks to the growing gap between the one per cent and everyone else, the subjective effect is of widespread impoverishment. 

- Elizabeth Kolbert, Feeling Low: The Psychology of Inequality, The New Yorker, January 15, 2018

Subjective social status [refers] to an individual’s perception of his/her place in the socioeconomic structure…The results suggest that subjective social status reflects the cognitive averaging of standard markers of socioeconomic situation and is free of psychological biases.

- Singh-Manoux, Adler, and Marmot (2003) "Subjective social status: its determinants and its association with measures of ill-health in the Whitehall II study" - aka the British Civil Servant study. 

Does a person's perception of their place within the general socioeconomic order directly influence their physical and psychological well-being? Let's pretend that researchers find robust evidence that subjective social status does indeed predict various indicators of well-being, e.g., people who rate themselves lower in the pecking order are less healthy or happy than those with higher self-ratings. What can we learn from such evidence? Nothing much by itself. We'd have to dig deeper.

For instance, we'd have to consider confounding variables. Regardless how strong the correlation, it's possible subjective social status has no effect on well-being. Perhaps factors that co-vary with perceived status account for the connection with well-being. That is pretty close what the researchers in the British Civil Servant study found.

Specifically, they found that five socioeconomic markers - occupational position, education, household income, satisfaction with standard of living, and feeling of financial security - accounted for 48% of the variance in subjective social status. After controlling for these variables, most of the association between subjective social status and health measures was greatly reduced or simply disappeared. For instance, occupation position completely accounted for the association between subjective status and diabetes. 

Still, the above five socioeconomic markers accounted for just half of subjective social status in this study and there was some remaining association between status and health, however attenuated. The researchers suggested the other half of the variance in subjective status was mostly related to the dynamic nature of material circumstances, such as rise in home value or inheritance gains, as well as pride in family or professional accomplishments. 

One thing the British Civil Servant study didn't address is whether higher inequality creates greater sensitivity to markers of status, thus (theoretically) harming the health and happiness of those on the lower rungs of the status ladder. This seems to be Elizabeth Kolbert's contention in her 1/15/18 New Yorker article. In Feeling Low, she advances the proposition that self-perceived social status is the product of social comparison on a very broad scale: based not just on how one compares to neighbors, friends, family members or colleagues but to the rich and within the society at large. According to this perspective, people care about their standing within the broader society and if that society is characterized by high levels of inequality, then people will feel bad. Since America is an unequal society, then most Americans must be feeling pretty low.

Kolbert supports her case with experimental evidence that people and monkeys feel mad or bad when they are manipulated to compare themselves unfavorably to others. But that's true for all sorts of social comparisons, not just status comparisons. Tell subjects they scored in the bottom 20% on some performance measure and they'll feel rotten. Expose women to a 15-minute video of gorgeous models and their self-esteem will take a beating. So, sure, you can make experimental subjects feel bad by exposing them to certain conditions in a lab, but do those conditions prevail in everyday life? 

When the conditions are hard to operationalize, like "salience of low status compared to the 1%", there's a shortcut:  go straight to the proposed effect of these conditions. In the case of inequality, look for evidence that the subjective sense of impoverishment is widespread in countries with high inequality. If the effect doesn't exist, then that particular cause-effect relationship most likely doesn't exist either.

Take America.

Is the subjective feeling of impoverishment widespread in America? No. In fact, 82% of the respondents in a recent Pew Research survey said either that their family has achieved, or is on their way to achieving, the American Dream. Doesn't sound like the "subjective  effect of widespread impoverishment" to me.

References:

Archana Singh-Manoux, Nancy Adler, Michael Marmot. Subjective social status: its determinants and its association with measures of ill-health in the Whitehall II study.. Social Science and Medicine, Elsevier, 2003, 56 (6), pp.1321-33.

Elizabeth Kolbert Feeling Low: The Psychology of Inequality, The New Yorker, January 15, 2018 Issue

Pew Research Center, “Political Typology Reveals Deep Fissures on the Right and Left”2/ October 2017