Inequality Harms Social Health

There are various ways to measure inequality: We can compare the top X% to the bottom Y% for any X and any Y. And all the measures very closely correspond with each other, so it doesn’t matter much which one we use. One very common measure is the ratio of the top 20 percent to the bottom 20 percent, so let’s use that one.

In Japan and four Scandinavian countries (combined), the top 20 percent bring about four times what the bottom 20 percent earn. The ratio is between 3.4 to 1 and 4.3 to 1. In the US, the ratio is 8.5 to 1 -- meaning the top 20 percent get eight-and-a half times what the bottom 20 percent get. Singapore's inequality is even higher: the ratio there is 9.7 to 1.

As a people of faith and compassion, we care about our world. We take in the wonder of this world, and we also take in the brokenness we see, and ask, “What happened?”

Let’s talk about social health. Let us define "social health" the way that researchers do, as an amalgam of ten factors. The lower the rates of:
  • homicides
  • obesity
  • teenage births
  • infant mortality
  • imprisonment rates
  • mental illness (including drug and alcohol addiction),
and the higher the rates of:
  • life expectancy
  • children’s educational performance
  • social mobility
  • level of trust,
then the higher a nation's social health.

That's a pretty good way to define social health. You might think of some other factors that would be important. For instance, I might imagine that "high teacher salaries," "high number of bookstores per capita," or "low proportion of the population who are lawyers" might be part of a healthy society, but that might be controversial. People of all political persuasions will pretty much agree that homicides, obesity, teenage births, infant mortality, high imprison rates, and mental illness are bad, that high life expectancy, children's educational performance, social mobility, and level of trust are good, and that all these are relevant to the health of a society.

With a definition of social health thus nailed down, researchers have then found that a country’s wealth does not correlate with its social health. A country may be rich, medium, poor, or extremely poor (less than $9,000 per person per year). Except in extremely poor nations, more wealth has no effect on social health. Equality, however, does correlate with social health.

Countries with high inequality, whether rich or poor, have low social health. Countries with low inequality, whether rich or poor, have high social health.

The US is quite wealthy. Annual national income is around $38,000 per person. But on the measure of social health we’re doing worse than most countries that have only half that much per-person income. After meeting a certain minimum, more wealth doesn’t do us any good. Equality does. In statisticians' terms, it’s not the mean income that matters, it’s the standard deviation.

Remember that ratio of the top 20% to the bottom 20%. If that ratio, in a given country, is 4 or 5, then social health is going to be pretty good in that country. If that ratio is 8 or 9, then that country’s social health tends to be worse.

The US is wealthy and Portugal is poor -- yet they both have high ratios (8.5 and 8.0) and low social health. Norway, however, which has about as much per capita wealth as the US, has a low ratio (3.9) and high social health.

Social health means a better quality of life for all of us. All of us. Even the rich. The quality of life of the top 1% -- or, indeed, the top 20% -- cannot be improved with any more money. Their quality of life can, however, be improved with greater equality and thus greater social health in the society in which they find themselves.
“The evidence shows that reducing inequality is the best way of improving the quality of the social environment, and so the real quality of life, for all of us . . . this includes the better off.” (Wilkinson and Picket, The Spirit Level: Why Greater Equality Makes Societies Stronger)
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This is part 3 of 4 of "Income Inequality"
See also:
Part 1: Deconstructing the Mango Pop
Part 2: It's Getting Worse
Part 4: Equality Is Good for Us

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