Does greater inequality cause worse health? No! And: kind of yes!

The question of whether greater economic inequality makes people’s health and wellbeing worse is an important one. The literature has been moving fast over recent years, and the debate has moved on somewhat since my previous essay.

It can all get a bit technical and econometric at times. The questions most people care about are: (1) is the relationship between inequality and health really a cause and effect one?; and: (2) if we make our country more equal, for example by increasing benefits or redistributing from the rich to the poor, will we improve health? Somewhat paradoxically, I am going to answer (from my current understanding of the literature): ‘kind of no’ to the first question; and ‘yes’ to the second.

First, let’s look at the very brief history.

Act One:

In which a slew of papers appears, showing that countries, or US states, with greater inequality in incomes had lower life expectancy, worse health and mental wellbeing, and a host of other poor outcomes like lower trust and higher crime, when compared to countries or states with lower inequality. Inequality here was measured as the dispersion of the distribution of incomes, typically captured by the Gini coefficient; and many of these studies controlled for the median per capita income of the country. It’s not how rich you are, the argument went, it’s how big the gap is within your society. Big gap is bad, above and beyond how much money people have in absolute terms. The finding of the Gini-bad health correlation was sufficiently recurrent as to produce claims that this was a general finding about humans and what they need to be healthy.

Act Two:

In which a medley of articles, mostly by economists, argues that the correlation between income inequality and average wellbeing is a kind of statistical artefact. When inequality is greater, the poorest people within that society are also poorer. If you think about it, it must be true that, other things being equal, when the inequality is greater, the poor are poorer. Imagine you have two countries both with median incomes of $50,000, one of which is more equal and the other more unequal. Visualize them as two distributions of incomes, distributions whose medians are in the same place. The poorest people in the unequal one must be poorer in absolute terms (further to the left) than the poorest people in the equal one. That’s just what it means for it to be a more dispersed distribution. Now, what’s really bad for health and wellbeing is being poor, and what is more, it’s a non-linear relationship. At a certain point, being a bit poorer makes your health a lot worse. So if the poorest people in society X are a bit poorer, their health is a lot worse, and hence the average health of the whole population is lower. (In a more unequal society, the richest people are also richer than the rich in a more equal society; but beyond a certain point, being richer does not increase your health much, so the positive effect of greater inequality on health – via the rich getting even healthier – is statistically small).

Controlling for the median incomes of the two countries does not eliminate the confound between the income of the poorest people and inequality: in my example, the median incomes of the two societies are the same. Thus, a series of studies argued that the correlation between countries’ Ginis and measures of aggregate health or wellbeing mostly (though perhaps not entirely) comes down to the poorest people in the more unequal countries having lower individual incomes. Tom Dickins and I just published a recent example of the genre, using data from 28 European countries. We showed that the association between the Gini coefficent and average health or life satisfaction is greatly attenuated once you control for individual income.

The difference between the poverty-pushers and the inequality-urgers is very subtle: both, in practice, both think it would be better for health in countries like the UK and USA if economic resources were redistributed. The real difference between their claims only becomes clear when you examine some wildly improbable counterfactual scenarios. Imagine an economic windfall that doubled the real incomes of everyone in bottom half of the income distribution, and trebled the real incomes of everyone in the top half. Do you think average health would get better or worse? For a poverty-pusher, the answer is better, because everyone’s incomes have gone up, including big income increases for the people currently facing poverty. For a purist inequality-urger, the answer is worse, because it is the gap that matters per se. We seem unlikely to get to see the results of that experiment any time soon. In the mean time, both camps agree that bringing the incomes of the worst-off closer to the median of the distribution in countries like the US and UK is a good goal: it would reduce both poverty and inequality. Both camps also agree that taxing wealth or very high incomes is a reasonable way to do this: for the inequality-urgers, that’s a good in itself, because it reduces the gap. For poverty-pushers, it’s the rich who can most afford to contribute more without suffering any meaningful decline in their well-being.

Act Three:

In which social psychologists repeat the search for correlations between the Gini coefficient and subjective measures of health and wellbeing. They improve on the work of Act One by using larger data sets, often including data over time rather than just a single cross-section. They tend to focus on inequality over smaller areas, such as US counties, rather than larger ones, such as US states or countries. This is, they argue, a double virtue. There are thousands of US counties, and only 50 US states. So you have much more statistical power when you use the smaller unit. Plus, people are really bad at knowing anything about the inequality of their entire country. They spend most of their lives moving around the smaller place where they live, and meeting the other people who live there. The Gini coefficient of a whole country is unlikely to be related to anything in people’s actual lived experience of inequality; the Gini coefficient of their town or county just might be. So it’s a better test of the causal potency of inequality to affect people if you use the local-scale measure. And, in fact, when people on low incomes move to rich neighbourhoods, thereby increasing the inequality they experience in their daily lives, their health and wellbeing improve rather than getting worse.

The Act Three studies conclude that there is no consistent relationship between inequality, as measured by the Gini coefficient, and happiness or health (for example here and here). Their studies are big and they are pretty firm about this. Their argument, note, is different from the Act Two guys. The Act Two guys said that there was a relationship, but it was largely explained away by individual income. The Act Three guys said there was no relationship to explain away in the first place.

And so?

And so, dear reader, where is the hypothesis that more inequality is bad for health, as they say, at?

First, I don’t think the current evidence supports the contention that the magnitude of the gap is in itself directly harmful to human health to any substantial extent. The primary grounds for saying this comes from the Act Two studies: when you control for the curvilinear effects of individual income, most (though maybe not absolutely all) of the association between inequality and health goes away. Inequality is associated with poor population health, because when the inequality is bigger, a greater fraction of the people face material scarcity. But, it is material scarcity that actually puts the causal boot in at the individual level. Concretely, the proximal reason people living in poverty in Tennessee have terrible health is not that the difference between their incomes and those of millionaires elsewhere in the state is too big. It’s that their incomes are not sufficient to live well on, given the society they live in. (I put this last rider in because I always get the response; yes, but their incomes are higher than the rich of yesteryear. Well maybe, but a lot of things cost more now than they did in yesteryear, including some really important things like food and access to healthcare.)

The secondary grounds for saying that inequality is not in itself the causal agent of harm is that when you measure the size of the income gap at the local-area scale, like the town or country, it seems to explain no variation in health outcomes (see Act Three). But the local-area scale is the area at which people are most likely to actually experience inequality in their lives. It’s odd in a way. When you measure inequality at a huge scale of measurement where people would be unlikely to be able to actually detect it (the country), you find associations. Where you measure it at a scale closer to their lived experience, those associations are absent. This does rather support the view that it can’t be the inequality per se that is the causal force at the proximal level. (By the way, I think the reason the associations hold at the large scale of countries better than the small scale of cities or countries is that the former contain a broader range of incomes, and the effect is largely mediated by individual income, as per Act Two.)

However, despite saying that inequality is not an important direct influence on health at the individual level, I do think that if we reduced inequality in developed countries, population health would improve. I am pretty much as sure of this as I am of anything in social science. This is simply because when you change inequality, you change the distribution of individual incomes. Specifically, you raise the incomes of the poor, for whom it will make a vast difference in health and wellbeing; and slightly reduce the incomes of the rich, who will scarcely feel it. So, the total amount of well-being goes up. (An important corollary of my position is that raising the incomes of the poor would improve population health whether or not it reduced the wealth of the rich, that is, regardless of its impact on the Gini. It’s just that, as it happens, the best levers we have for improving the incomes of the poor will also reduce the Gini.)

So: is the association between (country-level) inequality and population health causal, or not? Here, you have to say ‘it depends what you mean by causal’. On one view of causality, the way for example we say that AIDS is caused by the HIV virus, then, no; I don’t think we have identified, in the Gini coefficient, a pathogenic agent that causes the individual-level harm in such a way as to satisfy the Koch postulates. On the other hand, what people generally care about when they talk about cause is something like: would it regularly make a difference to health if we reduced the inequality of the income distribution? On this view of causality–which is sometimes referred to as an interventionist or manipulationist view–then I would have to say yes. Across the range of conditions that presently exist in developed countries, then available interventions that reduced inequality would generally, unless they had some weird negative by-products like causing a famine or a war, improve population health and wellbeing, possibly by a lot. Sorry if that’s rather a philosopher’s conclusion, but it seems to make sense of the conflicting literature.

There’s one more thing to say about the size of the gap in society. It may not per se have much effect on most people’s wellbeing. But I’ve been persuaded, notably by Darren McGarvey’s book The Social Distance Between Us, that it could have a big effect on the wisdom of our leaders. Broadly speaking, when social gaps are big, the people in power make worse decisions, and the people not in power are less able to hold them to account. This is because the ruling caste has so little contact with what the rest of the people are actually experiencing, and vice versa, that it is almost impossible for them to make appropriate decisions that work for the public good. And their constituents become disengaged, which means less public deliberation and input into the processes that are supposed to make the country better. The consequences of this gulf between the imaginary world that politicians are making policy for and the actual world of people’s lived experience are so evident that I scarcely need provide examples (consider the UK of the last twenty years, e.g.). If this factor is important, then it’s actually a different kind of argument for reducing inequality:- by doing so, we could get better institutions and better solutions to the challenges that we face.