How economic inequality harms societies - Richard Wilkinson

Summary

The speaker discusses the social and health impacts of income inequality, highlighting data comparing rich and poor countries. Despite economic wealth, inequality within societies creates significant social problems like reduced life expectancy, mental illness, crime, and low trust. Countries with smaller income gaps, like Japan and Sweden, tend to fare better in these areas. The speaker emphasizes that greater equality benefits all societal levels, reducing social stress and improving overall well-being. The argument centers on reducing income disparities to enhance societal health and psychosocial well-being.

Takeaways

• 💡 Income inequality is socially corrosive and divisive, an intuition that has been around since before the French Revolution.
• 📊 While rich countries have varying levels of national income, these differences do not impact life expectancy between countries.
• ⚖️ Inequality within societies, however, is deeply linked to health and social issues, with poorer people experiencing worse health outcomes.
• 📉 Relative income, social position, and status disparities within societies have more significant impacts on well-being than national wealth.
• 📊 Countries with smaller income differences (like Japan and Sweden) tend to perform better on social indicators, while those with greater inequality (like the USA and the UK) experience worse social problems.
• 🤝 In more unequal societies, trust levels drop, with fewer people believing others can be trusted. This affects social cohesion.
• 💥 Inequality is linked to a wide range of social problems, including mental illness, violence, and higher imprisonment rates, and these correlations hold true across countries and US states.
• 🏫 Inequality even affects social mobility, with countries like the USA showing less mobility compared to more equal societies like those in Scandinavia.
• 🔄 Greater equality can be achieved either through reducing pre-tax income differences (as in Japan) or redistribution through taxes and welfare (as in Sweden). Both paths lead to better social outcomes.
• 🧠 Inequality affects not just the poor but all levels of society, increasing stress, status insecurity, and psychosocial issues for everyone.

Q & A

What is the main focus of the speaker's presentation?

The main focus is on the effects of inequality on societies, using data to show how more unequal societies experience more social problems compared to more equal ones.

How does income inequality affect life expectancy according to the speaker?

While life expectancy is not correlated with national income across countries, within societies, life expectancy varies significantly across income levels, with poorer people having shorter lives. The speaker suggests that relative income, not absolute income, plays a key role.

What paradox does the speaker highlight regarding income and life expectancy?

The paradox is that while richer countries don't necessarily have higher life expectancy compared to poorer rich countries, within societies, wealthier individuals live longer than poorer individuals. This indicates that relative status matters more than absolute wealth.

What social issues does inequality exacerbate according to the speaker?

Inequality worsens a wide range of social problems such as mental illness, violence, trust levels, obesity, imprisonment rates, teenage births, and social mobility.

How does the speaker explain the relationship between inequality and social problems?

The speaker argues that inequality creates feelings of superiority and inferiority, leading to stress, status competition, and social dysfunction, which exacerbate various social issues.

What data sources does the speaker use to support their argument?

The speaker uses data from sources like the UN, the World Bank, the British Medical Journal, and UNICEF to show correlations between inequality and social problems.

How do more equal countries, like Japan and Sweden, achieve better social outcomes?

Japan achieves equality through smaller income differences before taxes, while Sweden achieves it through redistribution via taxes and welfare. Both methods lead to better social outcomes.

Does inequality only affect the poor in society?

No, inequality affects everyone in society, though its effects are more pronounced at the lower end of the social ladder. Even those at the top benefit from living in a more equal society, as seen in measures like infant mortality.

What is the connection between inequality and stress, according to psychological studies mentioned?

Psychological studies show that social evaluative threats—where one's status is judged by others—are key stressors. These types of stress are more common in unequal societies, leading to higher levels of chronic stress and related health problems.

What is the speaker's proposed solution to reduce the negative effects of inequality?

The speaker suggests reducing income differences through both pre-tax measures (like limiting excessive incomes and bonuses) and post-tax measures (like progressive taxation and social welfare) to improve the overall well-being of societies.

Outlines

00:00

🤔 The Intuition Behind Inequality's Effects

This paragraph introduces the topic of inequality and its divisive nature in society. The speaker references historical ideas, like those from the French Revolution, and shifts focus to current data. Life expectancy is compared across countries, showing no relationship between wealth and health, but within societies, income impacts health significantly. This sets the stage for examining inequality and its societal effects using data from rich, developed democracies.

05:02

📊 Exploring Inequality's Impact on Society

This section delves into various social issues linked to inequality. Using international data, the speaker highlights a strong correlation between inequality and negative social outcomes such as lower trust, higher imprisonment rates, teenage births, and lower social mobility. Countries with higher income inequality tend to perform worse on social indicators, while more equal societies, like Scandinavian countries, fare better.

10:03

🌍 Different Paths to Equality: Sweden vs. Japan

Here, the focus shifts to how different countries achieve equality. Sweden reduces inequality through redistributive policies like taxes and welfare programs, while Japan starts with smaller income differences before tax. Both approaches are effective in reducing inequality, suggesting that the method of achieving equality matters less than reaching that state.

15:03

📉 Inequality’s Broad Social Impact

This final section emphasizes that inequality affects not just the poor but also those higher up the social ladder. Studies show that even in affluent groups, outcomes like infant mortality are worse in more unequal societies. The speaker argues that inequality leads to social stress, heightened competitiveness, and societal dysfunction. Addressing inequality, especially through fairer income distribution, can improve the overall quality of life in society.

Keywords

💡Inequality

Inequality refers to the uneven distribution of resources, wealth, or opportunities among individuals or groups. In the video, it is identified as a key factor that drives social and health disparities across societies. The speaker explains that greater inequality leads to a wide range of societal issues, including higher rates of mental illness, violence, and lower levels of trust.

💡Life expectancy

Life expectancy is the average number of years an individual is expected to live. The speaker compares life expectancy across different countries and highlights that richer countries do not necessarily have longer life expectancies than less wealthy ones. This suggests that factors other than wealth, like inequality, have a stronger impact on health outcomes within societies.

💡Social gradient

The social gradient refers to the phenomenon where individuals' socioeconomic positions are linked to their health, with those lower on the social ladder experiencing worse health outcomes. The video illustrates how life expectancy, literacy rates, and other measures of well-being follow this gradient, showing that inequality within societies exacerbates these disparities.

💡Income distribution

Income distribution is the way income is divided among different groups in a society. The video contrasts countries with more equal income distributions (like Japan and Sweden) with those that have greater disparities (like the USA and the UK). The speaker emphasizes that societies with more equitable income distributions experience fewer social problems and better overall well-being.

💡Trust

Trust, in this context, refers to the level of social trust within a population—whether people believe that 'most people can be trusted.' The video demonstrates that in more equal societies, trust is significantly higher, while in unequal societies, trust levels are much lower, which contributes to social dysfunction and isolation.

💡Social mobility

Social mobility is the ability of individuals to move up or down the social or economic ladder. The video shows that in more unequal societies, like the US and UK, social mobility is limited, meaning that people’s socioeconomic positions are more likely to mirror those of their parents, perpetuating inequality across generations.

💡Mental illness

Mental illness refers to psychological disorders, including conditions such as depression, anxiety, and substance abuse. The video links higher rates of mental illness to more unequal societies, suggesting that social stressors associated with inequality, such as status anxiety and social comparison, play a significant role in increasing mental health issues.

💡Violence

Violence in the video is presented as a societal problem that becomes more prevalent in unequal societies. The speaker explains that higher levels of inequality are correlated with higher homicide rates, particularly in places like the United States, where inequality is more pronounced. This violence is linked to status-related tensions and social competition.

💡Social status

Social status refers to an individual's position or rank in a social hierarchy. The video argues that inequality heightens social status concerns, as people become more conscious of their relative position. This increased status anxiety is shown to contribute to various negative outcomes, such as lower self-esteem, stress, and social alienation.

💡Redistribution

Redistribution involves government policies that reduce income inequality by reallocating wealth through taxes and welfare programs. The speaker contrasts countries like Sweden, which reduces income inequality through redistribution, with countries like Japan, where smaller income gaps are created before taxes. Both approaches, however, result in healthier, more functional societies.

Highlights

Inequality is divisive and socially corrosive, with evidence supporting this from studies comparing more and less equal societies.

Despite differences in national income between countries, there is no relationship between wealth and life expectancy. However, within societies, income inequality strongly correlates with social gradients in health.

In richer countries, inequality correlates with various social problems such as lower life expectancy, worse educational outcomes, and higher rates of mental illness, homicide, and imprisonment.

In more equal societies like Japan and Nordic countries, the top 20% earn around three to four times more than the bottom 20%, while in more unequal societies like the USA and UK, the top 20% earn about eight times more.

Countries with higher inequality, such as the USA and UK, perform worse on key social indicators including trust, social mobility, mental illness, violence, and incarceration.

Mental illness rates are significantly higher in more unequal societies, with some experiencing three times the level of mental health issues compared to more equal societies.

In societies with greater inequality, people report much lower levels of trust in others. In more equal societies, levels of trust are much higher, indicating stronger social cohesion.

Social mobility is lower in more unequal societies, with wealthier families more likely to pass down their status, whereas more equal countries experience higher mobility across generations.

Income inequality affects everyone within a society, not just the poorest members. Even those at the top experience marginal benefits from living in more equal societies.

The key driver of societal issues in unequal countries seems to be psychosocial factors, including feelings of superiority, inferiority, and social evaluative threats.

Countries that reduce inequality through redistribution or smaller differences in pre-tax income experience better social outcomes across various metrics.

Stress from social evaluative threats—like worrying about how one is perceived—has been shown to raise stress hormone levels, contributing to worse health outcomes.

Studies have demonstrated that inequality's impact is not just an artifact of selective data. There are more than 200 peer-reviewed studies affirming the correlation between health and income inequality.

The rise in chronic stress-related illnesses in richer countries is now understood to be driven largely by social factors, particularly inequality and related stressors.

Reducing income inequality can significantly improve societal well-being, enhancing life quality by addressing underlying psychosocial stress and reducing social problems.

Transcripts

[Music]

[Music]

[Applause]

you all know the truth of what I'm going

to say I think the intuition that

inequality is divisive and socially

corrosive has been around since before

the French

Revolution uh what's changed is we now

can look at the evidence

we can compare societies more and less

equal societies and see what inequality

does I'm going to take you through that

data um and then explain why the uh

links that I think uh uh I'm going to be

showing you exist um but first see what

a miserable lot we

are I want to start though with a

paradox this shows you life expectancy

against gross national income how rich

countries are on average and you see the

countries on the right like Norway and

the USA are twice as rich as Israel

Greece Portugal on the left and it makes

no difference to their life expectancy

at all there's no suggestion of a

relationship there but if we look within

our societies there are extraordinary

social gradients in health running right

across Society this again is life

expectancy these are small areas of

England and Wales the poorest on the

right the the richest on the

left not a difference between the poor

and the rest of us even the people just

below the top have less good health than

the people at the top so income means

something very important within our

societies and nothing between

them the explanation of that Paradox is

that within our societies we're looking

at relative income or social position

social status where we are in relation

to each other and the size of the gaps

between

us and as soon as you've got that idea

you should immediately wonder what

happens if we widen the differences or

compress them make the income

differences bigger or smaller and that's

what I'm going to show you I'm not using

any hypothetical data I'm taking data

from the UN it's the same as the World

Bank has on the scale of income

differences in these rich developed

Market

democracies the measure we've use just

cuz it's easy to understand and you can

download it is how much richer the top

20% than the bottom 20% in each country

and you see in the more equal countries

on the left Japan Finland Norway Sweden

the top 20% are about three and a half

four times as rich as the bottom

20% but at the more unequal end UK

Portugal USA Singapore the differences

are twice as big on that measure we are

twice as unequal as some of the other

success ful Market

democracies now I'm going to show you

what that does to our

societies we collected data on problems

with social gradients the kind of

problems that are more common at the

bottom of the social ladder

internationally comparable data on life

expectancy on kids maths and literacy

scores on infant mortality rates

homicide rates proportion of the

population in prison teenage birth rates

levels of trust um obesity um mental

illness which in the standard diagnostic

uh classification includes drug and

alcohol addiction and social Mobility we

put them here all in one index they're

all weighted equally where country is is

sort of average score on these things

and there you see it in relation to the

measure of inequality I've just shown

you which I shall use over and over

again in the data the more unequal

countries doing worse on all these kinds

of social problems it's an extraordinary

close

correlation but if you look at that same

index of health and social problems in

relation to GNP per capita gross

national income there's nothing there no

correlation

anymore we were a little bit worried

that people might think we'd been

choosing problems to suit our argument

and just manufactured this this evidence

so we also looked in we did a paper in

the British medical journal on the

UNICEF index of child wellbe being it

has 40 different components put together

by other people um it contains whether

kids can talk to their parents whether

they have books at home what

immunization rates are like whether

there's bullying at school everything

goes into it here it is in relation to

that same measure of

inequality kids doing worse in the more

unequal societies highly significant

relationship but once again if you look

at that measure of child well-being in

relation to national income per person

there's no relationship no suggestion of

relationship what all the data I've

shown you so far says is the same thing

the average well-being of our societies

is not dependent any longer on national

income and economic growth that's very

important in poorer countries but not in

the the rich developed

world but the differences between us and

where we are in relation to each other

now matter very

much I'm going to show you some of the

separate bits of our index here for

instance is trust it's simply the

proportion of the population who agree

most people can be trusted comes from

the world value survey who see it the

more unequal end it's about 15% of the

population who feel they can trust

others but in the more equal societies

it rises to 60 or

65% and if you look at measures of

involvement in community life or Social

Capital very similar relationships

closely related to

inequality I may say we did all this

work twice we did it first on these rich

developed countries and then as a

separate test bed we repeated it all on

the 50 American states asking just the

same question do the more unequal states

do worse on all these kinds of measures

so here is Trust From The General Social

Survey of the federal government related

to

inequality very similar scatter over a

similar range of levels of trust same

thing is going on basically we found

that uh almost anything that's related

to trust internationally is related to

trust amongst the 50 states in that

separate test bed we're not just talking

about uh a fluke this is mental illness

who put together figures using the same

diagnostic interviews on random samples

of the population to allow us to compare

rates of mental illness in each Society

this is a percent of the population with

any mental illness in the preceding year

and it goes from about

8% up to three times that whole

societies with three times the level of

mental illness of others and again

closely related to

inequality this is violence these red

dots are American states and the blue

triangles of Canadian provinces but look

at the scale of the

differences it goes from from 15

homicides per million up to

150 this is the proportion of the

population in

prison there's about a tenfold

difference there a log scale up the side

but it goes from about 40 to 400 people

in

prison that relationship is not mainly

driven by more crime in some places

that's part of it but most of it is

about more punitive sentencing harsher

sentencing and the more unequal

societies are more likely also to retain

the death

penalty here we have uh children

dropping out of high school again quite

big differences extraordinarily damaging

if you're talking about using the

talents of the population this is social

Mobility it's actually a measure of

Mobility based on income basically it's

asking do rich fathers have Rich sons

and poor fathers have poor sons or is

there no relationship between the two

and at the more unequal end father's

income is much more important in the UK

USA and in uh countries the Scandinavian

countries father's income is much less

important there's more social

mobility and as we like to say and I

know there a lot of Americans in the

audience here uh if Americans want to

live the American dream they should go

to Denmark

I've shown you just a few things in

italics here I could have shown you a

number of other problems they're all

problems that tend to be more common at

the bottom of the social gradient but

there are endless uh problems with

social gradients that are worse in more

unequal countries not just a little bit

worse but anything from twice as common

to 10 times as common think of the

expense the human cost of that

I want to go back though to this graph

that I showed you earlier where we put

it all together to make two points one

is that in graph after graph we find

that the countries that do worst

whatever the outcome seem to be the more

unequal

ones and the ones that do well seem to

be the Nordic countries in

Japan so what we're looking at is a

general social dysfunction related to

inequality it's not just one or two

things that go wrong it's most

things the other really important point

I I want to make on this graph is that

if you look at the bottom Sweden and

Japan they're very different countries

in all sorts of ways the position of

women how closely they keep to the

nuclear family they're at opposite ends

of the polls in terms of the rich

developed

world but another really important

difference is how they get their greater

equality Sweden has huge differences in

earnings and it Narrows the Gap through

taxation general welfare state stes

generous benefits and so

on Japan is rather different though it

starts off with much smaller differences

in earnings before tax it has lower

taxes it has a smaller welfare state and

in our analysis of the American states

we find rather the same contrast there's

some states that do well through

redistribution some states that do well

because they have smaller income

differences before tax so we conclude

that it doesn't much matter how you get

your greater equality as long as you get

get there somehow I'm not talking about

perfect equality I'm talking about what

exists in Rich developed Market

democracies another really surprising uh

part of this

picture is that it's not just the poor

who are affected by

inequality there seems to be some truth

in John dun's no man is an

island uh in a number of uh studies it's

possible to compare how people do in

more and less equal countries at each

level in the social hierarchy this is

just one

example uh it's infant mortality some

swedes very kindly classified a lot of

their infant deaths according to the

British regar general socioeconomic

classification and so uh it's

anachronistically a classification by

father's occupation so single parents go

on their own but then the low where it

says low social class that's uh

unskilled manual occupations it goes to

through towards the skilled manual

occupations in the middle gen then the

uh junior non-manual going up the high

to the professional occupations doctors

lawyers directors of larger companies

you see there that Sweden does better

than Britain all the way across the

social

hierarchy the biggest differences at the

bottom of society but even at the top

there seems to be a small benefit to

being in a more equal Society we show

that on a about five different sets of

data covering educational outcomes and

health in the United States and

internationally and that seems to be the

general picture that greater equality

makes most difference at the bottom but

has some benefit even at the top but I

should say a few words about what's

going on I think I'm looking and talking

about the psychosocial effects of

inequality more to do with feelings of

superiority and inferiority of being

valued and devalued respected and

disrespected and of course those

feelings of uh the status competition

that comes out of that drives the

consumerism in our society uh it also

leads to status

insecurity we worry more about how we're

judged and seen by others whether we're

regarded as attractive clever um all

that kind of thing uh the social

evaluative judgments uh increase uh the

fear of th that those uh social

evaluative Jud

judgments interestingly some work

parallel work going on in social

psychology some people reviewed

208 different studies in which

volunteers had been invited into

psychological laboratory and had their

stress hormones their responses to doing

stressful tasks

measured and in the review what they

were interested in seeing is what kind

of stressors most reliably raise uh

levels of cortisol stress

hormone and the conclusion was it was

tasks that included social evaluative

threat threats to self-esteem or social

status in which others can negatively

drudge your performance those kind of

stresses have a very particular effect

on uh the physiology of

stress now we have been criticized of

course there are people who dislike this

stuff and people who find it very

surprising I should tell you though that

when people criticize us for picking and

choosing data we never pick and choose

data we have an absolute rule that if

our data source has data for one of the

countries we're looking at it goes into

the

analysis our data Source decides whether

it's uh uh reliable data we don't

otherwise that would introduce bias what

about other countries there are 200

studies of Health in relation to income

inequality in the academic peer-

reviewed journals this isn't confined to

these countries here providing a very

simple

demonstration of the same countries the

same measure of inequality one problem

after

another why don't we control for other

factors well we've shown you that GNP

per capita doesn't make any difference

and of course others using more

sophisticated methods in the literature

have controlled for poverty and

education and so on

um what about causality uh correlation

in itself doesn't Pro prove causality we

spend a good bit of time and indeed

people know the causal links quite well

in some of these outcomes the big change

in our understanding of drivers of

chronic of of uh Health in the rich

developed world is how important chronic

stress from social sources is affecting

the immune system the cardiovascular

system or for instance the reason why

violence becomes more common in more

unequal societies is because uh people

uh are sensitive to being looked down on

uh I should say that uh to deal with

this we've got to deal with the post tax

things and the pre-tax things we've got

to constrain income the bonus culture

incomes at the top I think we must make

uh bosses accountable to their employees

in any way we

can I think the take-home message though

is that we can improve the real quality

of human

life by reducing the differences in

incomes between us suddenly we have a

handle on the psychosocial well-being of

whole societies and that's exciting

thank you

[Applause]