Objective Test the original income inequality theory, by analysing its association with depression, anxiety and any mental disorders.

Methods We analysed a sample of 3542 individuals aged 18 years and older selected through a stratified, multistage area probability sample of households from the São Paulo Metropolitan Area. Mental disorder symptoms were assessed using the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV) criteria. Bayesian multilevel logistic models were performed.

Results Living in areas with medium and high-income inequality was statistically associated with increased risk of depression, relative to low-inequality areas (OR 1.76; 95% CI 1.21 to 2.55, and 1.53; 95% CI 1.07 to 2.19, respectively). The same was not true for anxiety (OR 1.25; 95% CI 0.90 to 1.73, and OR 1.07; 95% CI 0.79 to 1.46). In the case of any mental disorder, results were mixed.

Conclusions In general, our findings were consistent with the income inequality theory, that is, people living in places with higher income inequality had an overall higher odd of mental disorders, albeit not always statistically significant. The fact that depression, but not anxiety, was statistically significant could indicate a pathway by which inequality influences health.