Inequality has long been recognized as a divisive force in society, but now we have the evidence to prove it. By comparing societies with varying levels of equality, we can clearly see the impact of inequality. Let’s delve into the data and explore the reasons behind these connections.
Despite the common belief that wealthier countries have higher life expectancies, the truth is that there is no correlation between gross national income and life expectancy. However, within societies, we observe stark differences in health outcomes. Regardless of the average income of a country, there are significant social gradients in health. The gap between the poor and the rest of the population, even those just below the top, is substantial. This demonstrates that income inequality plays a crucial role within societies themselves, rather than between them.
To further illustrate this point, let’s examine income differences in developed market democracies. We can measure the gap between the top 20 percent and the bottom 20 percent of earners in each country. The more equal countries, such as Japan, Finland, Norway, and Sweden, have a ratio of approximately 3.5 to 4, while the more unequal countries, including the UK, Portugal, USA, and Singapore, have ratios twice as large. Surprisingly, the US is twice as unequal as some of the other successful market democracies.
Now, let’s explore the impact of income inequality on societies. By analyzing data on various social issues, such as life expectancy, education, infant mortality, homicide rates, and social mobility, we can construct an index that represents the overall well-being of a society. When comparing this index to the measure of inequality, we find a close correlation. The more unequal countries consistently fare worse in terms of social problems. These results hold true across different data sets and are not mere coincidences.
Focusing on trust, one crucial aspect of social well-being, we observe a significant disparity between more equal and more unequal societies. In societies with higher levels of equality, around 60 to 65 percent of the population believes that most people can be trusted, while in more unequal countries, this number drops to a mere 15 percent. Similar relationships apply to other indicators of social capital and community involvement.
Mental illness rates also reflect the impact of inequality. The prevalence of mental illness in a population ranges from approximately 8 percent to three times that amount in more unequal societies. This close relationship once again highlights the detrimental effects of inequality on various aspects of human well-being.
Violence, measured by homicide rates, is another disturbing consequence of income inequality. The differences are striking, with some societies experiencing 150 homicides per million people compared to only 15 per million in more equal countries. The proportion of the population in prison also varies significantly, with the more unequal societies having up to ten times more people incarcerated. These differences are not solely driven by higher crime rates but also by harsher sentencing and a more punitive approach.
Education is another area greatly affected by income inequality. High dropout rates in more unequal societies hinder the full utilization of the population’s potential. The same holds true for social mobility, where a society’s level of equality significantly impacts the extent to which socioeconomic status is passed down from generation to generation. In societies with high equality, such as in Scandinavian countries, the correlation between fathers’ income and sons’ income is much weaker, indicating more social mobility.
These findings do not suggest that perfect equality is necessary, but rather that reducing income differences in developed market democracies leads to improvements in various aspects of human well-being. The psychosocial effects of inequality, such as feelings of superiority or inferiority and the constant pursuit of status, contribute to the overall dysfunction in more unequal societies.
Critics may argue that correlation does not imply causation. However, extensive research suggests strong causal links between inequality and the negative outcomes we have discussed. Chronic stress from social sources and the fear of being judged and devalued contribute to health issues, violence, and other social problems.
To address this challenge, we must focus on both post-tax and pre-tax factors. Constraining high incomes and ensuring accountability of corporate leaders to their employees are essential steps toward reducing inequality. By actively working to reduce income disparities, we can improve the overall well-being of our societies.
In conclusion, the evidence is clear: income inequality has far-reaching consequences for the quality of life in societies. By understanding the psychosocial effects of inequality and its impact on various social issues, we have the opportunity to make meaningful changes and create more equitable societies. Let’s strive for a future where everyone can thrive, regardless of their socioeconomic status.