Economic inequality causes social problems




You all know the truth of what I'm going to 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 I'm going to be showing you exist.

But first, see what a miserable lot we are. (Laughter) 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 and the USA, are 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. This, again, is life expectancy.

These are small areas of England and Wales -- the poorest on the right, the richest on the left. A lot of 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, we're 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 U.N. -- it's the same as the World Bank has -- on the scale of income differences in these rich developed market democracies. The measure we've used, because it's easy to understand and you can download it, is how much richer the top 20 percent than the bottom 20 percent in each country.And you see in the more equal countries on the left -- Japan, Finland, Norway, Sweden -- the top 20 percent are about three and a half, four times as rich as the bottom 20 percent. But on the more unequal end -- U.K., 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 that 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 -- which in standard diagnostic classification includes drug and alcohol addiction -- and social mobility. We put them all in one index. They're all weighted equally. Where a country is is a sort of average score on these things. And there, you see it in relation to the measure of inequality I've just shown you, which I shall use over and over again in the data. The more unequal countries are doing worse on all these kinds of social problems. It's an extraordinarily 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 evidence, so we also 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 whether kids can talk to their parents, whether they have books at home, what immunization rates are like, whether there's bullying at school. Everything goes into it. Here it is in relation to that same measure of inequality. Kids do worse in the more unequal societies. 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 a 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 differences 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. It comes from the World Values Survey. You see, at the more unequal end, it's about 15 percent of the population who feel they can trust others. But in more equal societies, it rises to 60 or 65 percent. And if you look at measures of involvement in community life or social capital, very similar relationships are closely related to inequality.