In October 2008, Iceland’s financial system famously crashed as its three largest banks were nationalized.1 In the years leading up to the crash, income inequality in Iceland had reached unprecedented heights, as can be seen in Fig. 1. Immediately following the financial crash, however, income inequality levels were again sharply reduced to their pre neo-liberal era levels (Standardized World Income Inequality Database, n.d.). Although the decrease in income inequality happened largely because of income reduction and loss of capital gains among top-earners, it was also a result of radical changes in tax-policy aimed at protecting low-earners (Ólafsson & Kristjánsson, 2013, 2017). Thus, although both the high and low earners became poorer in absolute terms, the relative standing of the lower earners improved, due to a more equal income distribution. Icelanders have normally considered themselves a classless, egalitarian nation with a particularly even income distribution (Bernburg & Olafsdottir, 2012; Oddsson, 2016). Being accustomed to equality, Icelanders are sensitive to departures from egalitarian norms. The rise and decline in GINI did not go unnoticed among Icelanders and as can be marked by results showing that alongside the rise in income inequality, they perceived increases in class division, which then subsided together with decreased inequality after the financial collapse (Oddsson, 2016). Moreover, as the recession deepened following the collapse, the majority of Icelanders perceived improvement in their own subjective social location (Oddsson, 2017). Both the economic bubble with its steepening of the socioeconomic hierarchy and the consequent financial collapse affected the social fabric of Icelanders. The ‘invasion’ of neoliberal thinking that started in Iceland in the late Reagan-Thatcher era led steadily to privatization and free market policies opening up markets previously unavailable to Icelanders (e.g. Bernburg, 2016; Ólafsson & Kristjánsson, 2017). This led to the so-called “outvasion” of the Icelandic “business-Vikings”; entrepreneurs who then used their borrowed cash to purchase the three Icelandic state banks in 2003. With that, a new elite emerged. They were Iceland’s 1%, mostly consisting of the generously compensated bankers and staff from associated firms. This elite embarked upon conspicuous consumption and luxury living at levels never before witnessed in Iceland (see e.g. Bernburg, 2016; Garðarsdóttir & Dittmar, 2012; Oddsson, 2016). There is evidence that this elite had a strong influence on the normative standard of living for the rest. For example, during the economic boom the privatized banks offered and promoted cheap credit resulting in an increase in household debt, reaching 255% of aggregate disposable income (Garðarsdóttir & Dittmar, 2012; Johnsen, 2014). One study showed that amount of household debt was related to levels of materialism, but unrelated to income, indicating that Icelanders engaged in status-seeking consumption far outstripping their objective economic status (Garðarsdóttir & Dittmar, 2012).