inequality

Economic inequality is typically measured by the Gini coefficient for either wealth or income (the rate of change in wealth), with 0 being perfect equality and 1 being perfect inequality. Looking at the Gini coefficient for wealth, the United States is at .42, roughly where the Roman Empire was at its collapse according to historian Walter Scheidel. Globally, however, humanity’s Gini coefficient is .67 as of 2020—two-thirds of the way to perfect inequality.

Inequality is unfair

Most humans consider high levels of inequality unfair and undesirable from a moral perspective. There’s an experiment in game theory called The Dictator Game. Among two players, one gets to decide what share of a pot of money (e.g. $100) each player gets, but the other player has to agree or no one gets any money. The rationally optimal choice for “the dictator” is to keep $99 and give the other player $1, because it would be rational for the other player to accept $1 of free money. But of course it doesn’t play out that way. Humans have evolved a deep-seated desire for fairness and will punish those who take too much for themselves, even against their own self-interest. Generally, it’s only when dictators offer at least $30-40 that the other player will accept the deal.

More equal societies last longer

Fairness aside, perhaps the strongest argument against inequality is that it’s unsustainable: as Luke Kemp argues in Goliath’s Curse with evidence spanning thousands of years of history, unchecked inequality is the key reason societies collapse.

More equal societies are happier, healthier, and overall better-off

The Spirit Level: Why More Equal Societies Almost Always Do Better by Kate Pickett and Richard Wilkinson shows the “pernicious effects that inequality has on societies: eroding trust, increasing anxiety and illness, (and) encouraging excessive consumption”. The book’s research shows how for eleven different health and social problems—physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage pregnancies, and child well-being—outcomes are significantly worse in more unequal rich countries.

Everyone in America wants less inequality, and yet…

The study “Building a Better America—One Wealth Quintile at a Time” found that:

First, respondents dramatically underestimated the current level of wealth inequality. Second, respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution. Most important from a policy perspective, we observed a surprising level of consensus: All demographic groups—even those not usually associated with wealth redistribution such as Republicans and the wealthy—desired a more equal distribution of wealth than the status quo.

A Threat to Democracy

We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both.
—Louis Brandeis, Associate Supreme Court Justice

Rising inequality, coupled with the 2010 Citizens United vs. FEC decision removing any limits on money in politics, puts more power in the hands of the few to shape laws and institutions to their benefit, a reinforcing feedback loop causing government to grow less and less responsive to the needs of most citizens, and thus less and less democratic. Case in point, in 2016 after decades of rising inequality the United States’ democracy index score fell out of the “full democracy” range into that of a “flawed democracy”.

A Threat to Public Health

From Behave, how rising economic inequality leads to worse health in a population:

A neo-materialist explanation has been offered by Robert Evans of the University of British Columbia and George Kaplan of the University of Michigan. If you want to improve health and quality of life for the average person in a society, you spend money on public goods: better public transit, safer streets, cleaner water, better public schools, universal healthcare. But the more income inequality, the greater the financial distance between the wealthy and the average, and thus the less direct benefit the wealthy feel from improving public goods. Instead, they benefit more from dodging taxes and spending on their private good: a chauffeur, a gated community, bottled water, private schools, private health insurance. As Evans writes, “the more unequal our incomes in a society, the more pronounced will be the disadvantages to its better-off members from public expenditure, and the more resources will those members have to mount effective political opposition, e.g. lobbying.” Evans notes how this “secession of the wealthy” promotes private affluence and public squalor, meaning worse health for the have-nots.

In a vicious reinforcing feedback loop, rising inequality takes resources the poor need to maintain good health while at the same time insulating the wealthy from having to care.

Sapolsky then claims “inequality also makes for more crime and violence” in the same way, which would make sense (poverty leads to desperation which leads to crime) but doesn’t match the evidence: income inequality has grown steadily over the past decades while the national crime rate has plunged to historic lows, although these are national numbers which may hide trends within cities and communities.

Further reading from Dr. Sapolsky on the mutually-reinforcing effects of economic inequality and health inequality.

Research by Dr. Elizabeth Blackburn and Dr. Elissa Epel on telomeres—the tips of chromosomes that degrade as we age—show that the chronic stress of poverty shortens telomeres, effecively accelerating the aging process of (and stealing years of life from) people held in poverty. Furthermore, in a talk by Jack Kornfield on renunciation he mentions hearing Dr. Epel at a conference speak of a finding that in highly unequal societies, even the wealthy tend to have shorter telomeres (primary source needed), suggesting that inequality harms us all (though of course not equally). It’s interesting to speculate what could explain this. Perhaps stress resulting from fear of the have-nots. Or a deeply-seeded response to the suffering of others. Or perhaps cause flows the other direction: societies that equate wealth with dignity tend to produce the kind of vicious competition that causes both wealth inequality and high levels of stress across income groups.

Inequality causes depression and anxiety

From Lost Connections by Johann Hari:

When they were finally able to plot the data on a graph, they were startled by how close the relationship was. The more unequal your society, the more prevalent all forms of mental illness are. Other social scientists then broke this down to look at depression specifically—and found the higher the inequality, the higher the depression. This is true if you compare different countries, and if you compare different states within the United States. It strongly suggested that something about inequality seems to be driving up depression and anxiety.

Further Learning

• Inequality.org, a repository of data about global inequality
• Limitarianism: The Case Against Extreme Wealth makes the case that extreme inequality should not exist, with practical alternatives
• Realtime Inequality charts the most up-to-date statistics on income and wealth inequality in the U.S.
• The Yard-Sale Model explains how in a simplified version of our economy, random chance favors the already-wealthy, causing wealth to “trickle up”.