BACKGROUND: Adolescence is a period of life when young people increasingly define themselves through peer comparison and are vulnerable to developing mental health problems. In the current study, we investigated whether the subjective experience of economic disadvantage among friends is associated with social difficulties and poorer mental health in early adolescence.

METHODS: We used latent change score modelling (LCSM) on data from the UK Millennium Cohort Study, collected at ages 11 and 14 (N = 12,995). Each LCSM modelled the mean of an outcome related to mental health and interpersonal difficulties at age 11 (including self-esteem, well-being, emotional difficulties, peer problems, bullying, victimisation and externalising difficulties), the change of the outcome from ages 11 to 14 and its predictors, including perceived income inequality among friends (i.e. perceiving oneself as belonging to a poorer family than the families of one's friends).

RESULTS: Perceived income inequality predicted adverse mental health and a range of interpersonal difficulties during adolescence, even when controlling for objective family income. Follow-up analyses highlighted that, at 11 years, young people who perceived themselves as belonging to poorer families than their friends reported worse well-being, self-esteem, internalising problems, externalising problems and victimisation at the same age (relative to those who perceived themselves as richer than or equal to their friends, or who did not know). Longitudinal analyses suggested that victimisation decreased from ages 11 to 14 to a greater extent for adolescents who perceived themselves as poorer than other adolescents.

CONCLUSIONS: The salience of economic inequalities in proximal social environments (e.g. among friends) in early adolescence could further amplify the negative effects of economic disadvantage on mental health and behavioural difficulties during this period.