Equality: The Answer to Everything?

Posted on January 2, 2012 by

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Summary: The book The Spirit Level published in 2009 outlines strong empirical proof that greater income equality creates a better society. Greater equality is inversely correlated with a large number of social problems, and even rich people are shown to be better off in more equal societies. Causation is supported by reasoning and experimental evidence. Greater equality is also more environmentally, as well as socially, sustainable. Legislation, different types of company ownership, and redistributive taxation are potential means to greater equality, but equality does not require a large state.

I recently read The Spirit Level – Why Equality is Better for Everyone, a book by Richard Wilkinson and Kate Pickett published in 2009. The basic premise of the book is that greater income equality makes life better for everyone, not just the poor. What makes the book different is that this message is supported by a lot of data. That is, they attempt to empirically prove the message.

Equal countries are better. The authors manage to correlate a lot of social ills with income inequality in developed countries. These range from lower life expectancy to higher prison populations. In fact, I’ll just list them all.

Higher income inequality correlates with: lower trust of strangers, lower status of women, lower % national income spent on foreign aid, higher mental illness, higher drug usage, lower life expectancy, higher murder rate, higher infant mortality, higher obesity, lower mathematical ability and literacy, higher teenage pregnancy, higher conflict levels between children, higher prison populations, lower social mobility, lower levels of recycling, longer working hours, less recycling of waste.

About the only positive thing income inequality seems to do is raise career ‘aspirations’. But all this means people aspire to be the very top-earning, white-collar workers even when most of them will never be able to be. Instead of being content in a ‘low-skilled’ or blue-collar job, feeling they don’t earn that much less than everyone else, they are dissatisfied with their lot in life.

Income inequality globally (red=higher, blue=lower). The Spirit Level proves that more equal societies are better for everyone. Image from Wikipedia.

But aren’t the rich alright wherever they are? No. People, whatever their income, are worse off than people with the same income in more equal societies. You do better in terms of welfare in a more equal society even if you are rich.

Are the data good enough? Yes. My immediate reaction to the book was uncertainty due to its failure to cite correlation coefficients or R2 values and p values (i.e. probability of there being no correlation). However, the authors do state that they don’t put a trend line through the data points unless it is much more likely than chance that there is a correlation, and they put all the stats in full and links to their papers on the website. I guess one reason they don’t want to cite statistics is because they think it will put people off, but a couple of numbers at the bottom of the graphs would have made a good impression for people who do know about statistics. Correlations are especially strong when social ills are converted to a combined ‘index’, which is what you would expect as outliers are ‘ironed out’.

Correlation but not causation? The authors make a strong case for causation – i.e. that social ills are caused by income inequality, and don’t just happen to correlate with it. I won’t go into them all here are there’s not space, but, for a start a) a reasonable hypothesis of causation can connect income inequality to all the social ills measured, but not the other way round – how could higher murder rates and prison populations cause inequality?; b) several experiments show poorer performance in mental tasks in groups of children when they are told they are inferior then when they are told they are superior.

Isn’t it better to be rich but unequal? Perhaps. People do seem to have better lives in many respects in less equal, developed countries than poorer ones, though there is more environmental damage (see below). However within poorer countries income inequality makes things worse, as it does within richer countries. Equality and development are not mutually exclusive.

What about the environment? More equal developed societies recycle more and – though the authors don’t flag this up for some reason – seem to emit less carbon per capita. Developing countries have less environmental impact, but Cuba is one of the most equal developing countries and has a very low impact. Equality is good, even if you have doubts about western-style ‘development’. The authors advocate steady state economics, and (of course controversially, but potentially usefully) highlight Cuba as an example of high human development (education, health) and low environmental impact.

Does this mean a big state and high taxes? No. Though equality was the traditional policy of the political left in the 20th century, even if you don’t like the state you can like equality. The authors make the point that Japan has extremely low inequality, but also a very small (smaller than the US) state. Equally, New Hampshire and Vermont are two the most equal US states, and New Hampshire has one the highest tax burdens and Vermont one of the lowest. The authors empirically prove equality is good for everyone and doesn’t require (though doesn’t exclude the possibility of) a big state. However, a big state can be a solution, as is the case in Sweden. Given the generally high standard of most things in Sweden (apart from beer and certain MSc courses), I think a big state may not be such a bad idea.

What are you waiting for? Even if you don’t like big states, greater income equality is proven to make life better for everyone. So what are you waiting for? Let’s do something. For a start, check out all the info on the website of the Equality Trust set up by the authors: http://www.equalitytrust.org.uk/. The authors also suggest lots of solutions, such as mutualisation, laws to limit income disparity within companies, and, of course, redistributive taxation. Get out there. Tell people. Spread the word. Urge politicians for reform, and vote for parties in favour of more equality.

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