Why you should care about income inequality

Street art by Meek. Image: Wikimedia

​As societies have developed, technological advances and medical discoveries have increased life expectancy and made our lives seemingly easier.

But this development is not experienced equally by all people.

In general, industrialised nations have a high quality of life. Yet stark differences remain in how wealth and benefits are spread across society. This is called income inequality.

Sadly, income inequality is a global phenomenon. The distribution of wealth across the globe shows that 71% of the world’s population hold just 3% of the global wealth. On the other hand, 8% of the population hold over 84% of the world’s wealth.

​Income inequality is especially pronounced in the United States, where the income gap is twice that of the rest of the industrial world.

Distribution of incomes in the United States, 2015. Data sourced from Saez (2016).

So you might be thinking, why is this important?  Here are 3 reasons why you should care about income inequality:

1. Less happiness and life satisfaction

The more wealth a society has the happier that society will be, right?

Well, not quite.

In 1974, Economist Richard Easterlin showed that Americans were not happier during periods of high economic growth.

Some countries, however, do show increased happiness with increased economic growth. 

What can explain this difference? Income inequality.

In a study of 34 countries, researchers found that when income inequality is high, increased economic growth is not associated with increased happiness.

​When economic inequality is high and people can see the wealth of others, it may make their relative lack of economic prosperity more obvious. 

We become aware of the differences in our own economic gains, and the difference in our lifestyles. This, in turn, can reduce our sense of happiness and wellbeing.

Reflecting on how we consume social media, platforms such as Instagram give us daily access to the life of the rich, through accounts like the rich kids of instagram, which boasts “They have more money than you and this is what they do.” 

2. More obesity and related health problems 

​When thinking about how income inequality affects health, it’s reasonable to think that your personal wealth would be the main determinant of your personal health.

You may conclude that income inequality only affects the health of the poor, but you’d be wrong.

Childhood obesity is becoming a concern in many nations. Image: Robin Corps CC BY-SA 2.0

Higher obesity and related health conditions such as diabetes, cancer, and heart disease are present amongst all social classes in societies with higher income inequality. 

Regardless of personal wealth, people living in countries with greater income inequality experience poorer health outcomes than their counterparts in more equal societies.

People in a laboratory setting, who were made to feel relatively poor, ate 54% more calories, rated the high calorie food as more enjoyable, and were more likely to want to buy higher calorie food in the future that those who were made to feel rich.

Outside of the laboratory we also find that the more income inequality, the higher rates of obesity in a society.

This shows us that inequality has a direct effect on our lifestyles.

3. Less generosity and trust

Higher income inequality makes the wealthy less generous and breeds a sense of entitlement—the belief that one is more important and deserving than others.  However, in more equal societies, the wealthy are just as generous as the poor.

People in areas with high income inequality also trust each other less. When there is less trust in society, people are more likely to only look out for themselves, and their families.

The disparity in wealth is observable in many industrialized nations. Image: George Hodan CC0 Public Domain

Communicating inequality

We’ve established that inequality has detrimental effects for all. Yet it is not always communicated as something that is bad.

Politicians often frame inequality in a way that hides the full picture. They highlight economic mobility—the sense that everyone can move up the wealth ladder—and related concepts such as the American Dream.

For example, Rick Santorum recently said: "There is income inequality in America, there always has been, and hopefully, and I do say that, there always will be. Why? Because people rise to different levels of success based on what they contribute to society.”

Be aware that this framing has profound effects on our psychology. People become more tolerant of income inequality the more they perceive economic mobility.  In truth, economic mobility is not as widespread as people think.

​So next time you hear politicians praise inequality, remember the burden falls not just on the poor, but on all of society.

- Zahra Mirnajafi