The Spirit Level: is income equality the sole solution?

Published on Incomes and Inequality

Earlier this week, the ippr hosted a seminar with Richard Wilkinson, author of The Spirit Level. Wilkinson presented data set after data set to make one basic point: more equal societies have better social outcomes such as rates of mental illness and teenage pregnancy, not just for those at the bottom but for everyone. A wealthy, well-educated person in Sweden will be healthier and his children will do better at school than a similarly wealthy person in the UK. This is because Sweden is a more equal society than the UK, by which Wilkinson means that the ratio of the incomes of the top 20 percent in society compared to the bottom 20 percent is smaller.

Wilkinson’s theory about why unequal societies have poorer social outcomes stems from evolutionary psychology. He argues that in an unequal society, concerns about status dominate. Those at the bottom of the income distribution have low status which leads to persistent stress which in turn leads to poor social outcomes due to the negative impacts of elevated levels of cortisol, the stress hormone. The impact of cortisol on health, in particular, has been well documented by the World Health Organisation and others as part of the explanation for persistent health inequalities.

The Spirit Level has attracted attention on both sides of the Atlantic in large part because Britain and the US are offenders according to Wilkinson’ analysis – highly unequal societies – while Japan and the Scandinavian countries are the good guys. In the UK, the distance between those who earn the most in society and those on low-to-middle incomes has grown dramatically. In 1968, someone in the middle of the income distribution was £4,378 a year less well off than someone three quarters of the way up. By 2009, the gap had almost tripled to £11,523. Wilkinson’s thesis predicts worsening social outcomes for low-to-middle earners in the UK by virtue of this trend in the distribution of income. As they fall further behind their more affluent peers in terms of income, their status in society also declines.

In fact, Wilkinson’s work would suggest that raising the incomes of low earners, for example by paying a living wage, without also bringing down the incomes of those at the top would do little to improve the well being of low earners. This cannot be the case. The Marmot Review of Health Inequalities published last year highlights the negative consequences for individuals of a lack of autonomy, control and support at work. This is the case for many low earners in low skilled, insecure employment that affords little autonomy, creativity or flexibility. Improving the quality of employment for these individuals as well as their wages will improve their well being, even if they see little income mobility over their lifetime.

Wilkinson is also highly sceptical of the contribution of public services to addressing social problems and improving the lives of low-to-middle earners, seeing services as only of minor significance compared to addressing income inequality. One argument put forward to justify this position is that there is little correlation between levels of public spending on healthcare and life expectancy or infant mortality. This is widely accepted to be true. But it may simply highlight the limitations of the current NHS with its focus on illness rather than prevention and well being.

It is likely that current investments in public services in the UK are not well targeted to fight against the income gradient in social outcomes: not enough investment in the early years; not enough investment in making sure that every child leaves school able to read and write and thrive in the labour market; inadequate early intervention to deal with behaviour problems in childhood; poor support for parents; and not enough investment in preventative health services. Frank Field’s review of child poverty for the Coalition is in agreement. Field concludes that ‘the evidence about the importance of the pre-school years to children’s life chances as adults points strongly to an alternative approach that focuses on directing government policy and spending to developing children’s capabilities in the early years’.

Wilkinson has taken on a politically tricky topic, particularly in the current environment, and is attacking it with gusto. He acknowledges that more research is needed to ascertain whether reducing inequality will actually improve the lives of low-to-middle earners which his data on inequality would suggest but which we do not know for sure. From a policy perspective, the interesting question is what balance of actions is required to improve the lives of low-to-middle earners – what mix of tackling inequality, improving the quality of employment, raising living standards and investment in public services. One strategy – in this case addressing income inequality – cannot be the answer.