Why Wealth Inequality is Bad

A Response

Reading a couple of VOX back-issues, I came across a quite provocative article entitled ‘Inequality Is Good’. Christian Wigstrom, the author, argued that having a wealthy class in society serves as a point of reference for the rest to aspire to – a positive ‘carrot’ for society’s progression. To the author’s credit, his rationale goes as such, “if equality of opportunity is granted, inequality of wealth is a truly desirable state”. (VOX Vol. 1, Issue 1, Feb. 2006) However, as pointed out by Philip Pärnamets who responded in a subsequent issue of VOX, ‘opportunity’ is far too often determined by wealth.

In this article I do not aim to explain what leads to inequality in opportunity or wealth, but merely to display the irrefutable link between socioeconomic inequality and negative effects towards society, hopefully in a way that leaves a resonating message that inequality is most certainly not good.

Above, there are two charts showing the progression of countries’ income per person and life expectancy. From them you can see that, for poorer countries, a country’s GDP per capita is quite strongly related to life expectancy. The charts show that as economic development progresses, this trend gets weaker where eventually a plateau is reached (chart on top, the ‘Millennium Preston Curve’).1 What does this tell us? In short, material differences are more closely associated with the differences in life expectancy of the poorer countries. Once countries reach the top, the health effects of economic development are exhausted.2 Something else mediates the differences in life expectancy between these countries that have settled high on the plateau.

Above-left is a chart showing the 21 richest countries.3 Again you are looking at the differences in their life expectancies, but this time they are arranged not by wealth, but by a measure of income inequality within each country (Gini-coefficient). So the ‘something else’ that mediates life expectancy in these richer countries has to do with inequality: as the nations get more unequal, their populations live shorter lives on average.

It turns out that this inequality effect is not restricted to life expectancy and rich countries. The graph above-right shows the differences in the rate at which infants die (infant mortality). Poorer countries are included in this study, and like the Millennium Preston Curve, death is influenced by the level of wealth, especially in the poorest countries. However, when you split the countries into three groups of different inequality levels, you can clearly see stratification: highest mortality with the most unequal and vice-versa.
Now going back closer to home, UNICEF released a report on the child well-being in rich countries. Britain along with the USA came bottom. What are we doing wrong? Well, when a statistical analysis was done to find what national measures associated with child well-being, average income was not a significant factor, but income inequality certainly was.4

On another level, the extreme cases of inequality made vivid by certain national borders offer a depressing new manifestation of the externalities of inequality. These come in the form of emerging infectious diseases such as those saddling the US-Mexican border with ever-greater prominence: multi-drug resistant tuberculosis, rabies, dengue and sexually-transmitted diseases including HIV.5
Up to this point I have illustrated the state of affairs as observed from single time-points—freeze-frames of societies. Alluding to Mr Wigstrom’s assertion that Central and Eastern European countries improved their situation by aspiring to the West, in this specific collection of countries how did the haphazard adoption of market principles affect their societies? Undoubtedly transition can lower living conditions, but what happens when we compare the rate at which inequality increased to the rate at which life expectancy changed in these countries?

Looking at the chart above, states that changed to becoming more unequal quickest (from when the communist regimes fell in 1989 to 1995) tended to lower life expectancy most.6 What else happened in these countries? There were increases in tuberculosis, diphtheria, measles, whooping cough, syphilis and male deaths from accidents and homicide.7

So how does this all happen? I should hopefully have helped to clarify that there is no contention as to whether inequality has negative societal effects, although there is argument as to what pathways link inequality to all of its effects that I have described above. The central hypotheses try to unravel the nuances of the relative involvement of trust, social cohesion and status comparison. Although many factors lie tangled with this knot, stress seems to be intertwined throughout. The manifestation of social factors into psychological distress, which in turn translates into physiological pathologies, concerns a complex pathway that today is investigated through an emerging inter-disciplinary academic community.

What about the planet’s emerging economies? Nations can learn from the experience of others. Sweden manages its relatively equal society and good health through tax policies that promote redistribution. Japan does the same through better job prospects and benefits. The UK’s social security benefits for the unemployed is low for EU poverty standards. 10% of the UK’s poorest take 3% of the nation’s income. 10% of its richest take over a quarter. If you look at wealth (savings, assets, house ownership, etc.) in 2000, 10% of the country’s richest owned 54%, whilst the 1% richest amongst us owned 23%.8 Inequality in the UK began its climb in the 1970s. It has since never dropped to levels lower than during the Thatcher era.

So who is most affected by inequality? A study last year9 looking at death rates found that 25-39 year-olds are the most affected by inequality worldwide. In the OECD countries (mainly rich market economies including the UK) the most affected age group is that of the 15-29 year-olds. I believe most of this publication’s readers are within this age-group. What is your say?

‘A society which nurtures people’s skills and abilities throughout the population, which provides economic opportunities for all, and fosters a cohesive and integrated social environment, would do more for health than curative medical services are able to.’10

Endnotes:

1. Dye C. Is wealth good for your health? Gresham College.
2. Deaton A. Health in an age of Globalization. Bookings Trade Forum 2004:83-130.
3. Wilkinson RG. The impact of inequality : how to make sick societies healthier. London: Routledge, 2005.
4. Pickett KE, Wilkinson RG. Child wellbeing and income inequality in rich societies: ecological cross sectional study. BMJ 2007.
5. Farmer P. Infections and inequalities : the modern plagues. Berkeley: University of California Press, 1999.
6. Marmot M, Bobak M. International comparators and poverty and health in Europe. BMJ 2000;321(7269):1124-8.
7. Shaw M, Dorling D, Smith GD. Povery, social exclusion, and minorities. In: Wilkinson RG, Marmot MG, editors. Social determinants of health. 2nd ed. Oxford: Oxford University Press, 2006.
8. Shaw M, Davey Smith G, Dorling D. Health inequalities and New Labour: how the promises compare with real progress. BMJ 2005;330(7498):1016-21.
9. Dorling D, Mitchell R, Pearce J. The global impact of income inequality on health by age: an observational study. BMJ 2007;335(7625):873.
10. Stansfeld SA. Social support and social cohesion. In: Wilkinson RG, Marmot MG, editors. Social determinants of health. 2nd ed. Oxford: Oxford University Press, 2006.; Quote from: Blane 1996:10.

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Christo Albor is a doctoral student at the Department of Health Sciences of the University of York.