How economic inequality harms societies - Richard Wilkinson

you all know the truth of what I'm gonna say I think the intuition that inequality is divisive and socially corrosive has been around since before the French Revolution 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 and then explain why the links that I think I'm going to be showing you exist 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 in the USA a 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 is again is life expectancy these are small areas of England and Wales the poorest on the right 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 were 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 has on the scale of income differences in these rich developed market democracies the measure we've used sis because 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 moral countries on the Left Japan Finland Norway Sweden the top 20% 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 successful 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 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 obesity mental illness rich in the standard diagnostic classification includes drug and alcohol addiction and social mobility we put them the year all in one index are 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 just shown you which I shall use over and over again in 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 well-being it has 40 different components put together by other people it contains weather can talk to their parents whether they have books at home what immunization rates are like weathers bullying at school everything goes into it here it is in relation to that same measure of inequality kids doing worse in the morning society's 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 rich developed world but the difference is 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 Values Survey you 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 testbed we repeated it all on the 50 American states asking just the same question to the more unequal States to 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 of a similar range of levels of trust same thing is going on basically we found that 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 a fluke this is mental illness w-h-o put together figures using this same diagnostic interviews on random samples of the population to allow us to compare rates of mental illness in each Society this is the percent of the population with any mental illness in the preceding year and it does from about 8 percent up to 3 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 15 homicides per million up to 150 this is the proportion of the population in prison there's about a tenfold difference their 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 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 fathers income is much more important in the UK USA and in countries the Scandinavian countries fathers income is much less important there's more social mobility and as we like to say and I know a lot of Americans in the audience here 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 that all problems that tend to be more common at the bottom of the social gradient but there are endless problems with social gradients that are worse in more unequal countries not just a little bit worse but anything from twice as common to ten times as common think of the expense the human cost of that I want to go back there 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 the countries that do worse whatever the outcome seemed 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 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 there are very different countries in all sorts of ways the position of women how closely they keep – no clear family the opposite ends of the poles in terms of the rich developed world but another really important difference is how they get their great a equality Sweden has huge differences in earnings and it narrows the gap through taxation general welfare states 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 American States recite find rather the same contrast the 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 there somehow I'm not talking about perfect equality I am talking about what exists in rich developed market democracies another really surprising part of this picture is that it's not just the poor who affected by inequality there seems to be some truth in John Dunn's no man is an island in the number of 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 its infant mortality some Swedes very kindly classified a lot of their infant deaths according to the British Registrar General socio-economic classification and so it's anachronistically a classification by father's occupation so single parents go on their own but then the low wet says low social class that's unskilled manual occupations it goes through towards the skilled manual occupations and a little gentler than the 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 difference is 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 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 the status competition that comes out of that drives the consumerism in our society 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 all that kind of thing the social evaluative judgments increase the fear of there's social evaluative 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 stresses most reliably raise levels of cortisol the central 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 judge your performance those kind of stresses have a very particular effect on 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 a 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 hiding a very simple demonstration that 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 what about causality correlation in itself doesn't prove prove causality we spend a good bit of time and indeed people know the causal links quite well in some of these outcomes a big change in our understanding of drivers of chronic of of 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 people are sensitive to being looked down on I should say to deal with this we've got to deal with the post-tax things and the pretax things we've got to constrain income the bonus culture in comes at the top I think we must make 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 you

  1. Yeah, all we U.S. Citizens are sooo fortunate to have been born in the "Greatest Country on Earth", right?

  2. The charts should show Countries that have a Conservative Party and how inequality exist in them more because their beliefs have been proven ineffectual. Also, Americans have already fallen for the Republican Party's unregulated Capitalism and it terrible effects. From 1865-1929, Republicans pushed unregulated Capitalism and the inequality it created. Capitalism failed in 1929, the Great Depression was the result of Republican Party's economic beliefs. The Republican party and the Robber Barons fought FDR for 20 years , they threw out the same lies that they push to uneducated people today.

    FDR was finally able to pass the New Deal policies and regulation of Capitalism. America was founded on allowing the potential of each citizen to exist without oppression from a King or Corporation. FDR took the same idea and added that each citizen will keep more of the money generated from their labor. Combining potential with money, allowed for unimaginable growth as each free citizen expressed their wealth freedom in small businesses, better education and pursued the American Dream. FDR created the worlds first Middle Class, the first Super Power nation and regulated capitalism created Wealth beyond the Robber Barons dreams. The Robber Barons and Republicans failed to see that the Middle Class created Wealth not attainable in an unregulated Capitalist system with inequality creating Kings and Peasants.

    Republican economics has already been proven a failure and Progressive Economics created everything great about America. As with all Kings and Peasants economies, enough people will finally be effected and non-violent or violent revolution will occur.

  3. Then why does Japan have nearly highest suicide rate in the world? It's one of the least unequal countries…

  4. Engineer here with a heavy statistical background in data analysis.

    If income inequality is positively correlated all that means is that the data is not normally distributed and that the average is a terrible measure of it. For example, say there are 100 people and 20 are making 100,000/year, but 80 are making 10,000/year. Your average is 28,000. But most of your people are only earning 10,000/year. All his presentation tells us is what we already know: the poorer you are the lower your quality of life.

    I'd like to see all his graphs against the median income for each country. That would provide much more useful information. But even that would be skewed since $100,000 in LA buys you a lot less than $100,000 in Ohio.

    Data can always, always be manipulated to fit your story. After working in a research lab for years doing data analysis I don't trust it at all.

  5. Take graph at 1:33. It makes it looks like the richest have 6 times the life expectancy than the poorest when the difference is only about 71.5 to 79.1 or so.

    Most of his graphs just say 'higher' or 'lower' or 'better' or 'worse' without giving numbers and there are a lot of nations that are one one graph but not on the other. Russia and India for instance are the two highest nations with wealth difference and they weren't on any of them.

    If this is true however I don't see a wealth problem so much as a coveting problem that you value yourself by how rich you are compared to your neighbor.

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