Wall Street Protesters Have a Point: Inequality

10/20/2011 05:49 pm ET | Updated Dec 20, 2011

Occupy Wall Street protesters may have a diffuse agenda for change but they are upset about the same problem -- unequal distribution of income that is dragging our society down.

In a land of plenty, such as the U.S., one might reasonably expect that citizens would be happy and healthy, that they might work hard and enjoy social mobility. This is the American Dream. Yet, if a person wanted to realize the American Dream, they might consider doing it in Finland, Sweden, or even Japan. The very worst place for the American Dream is America itself.

This conclusion leaps from the pages of The Spirit Level by Richard Wilkinson and Kate Pickett (1). Their main point is that high levels of income inequality detract from the quality of life for all residents of a country, even the privileged elite. Inequality is stressful and undermines trust.

Wilkinson and Pickett compiled an index of health and social problems for the wealthiest countries in the world. They included:

  • Life expectancy and infant mortality
  • Obesity
  • Mental illness
  • Teenage births
  • Imprisonment rates
  • Homicides
  • Level of trust
  • Children's educational performance
  • Social mobility

When they graphed the Index of Health and Social Problems against income inequality, the found that more unequal countries did worse on every criterion. This means that if a country has very unequal distribution of income, you can be sure that it also has severe problems with health, crime, education, and, yes, social mobility.

The countries with the best quality of life (and lowest religiosity) are Japan, Sweden, Norway, the Netherlands, Switzerland and Finland. Dead last in their sample of 21 wealthy democratic countries was the U.S., followed by Portugal and the U.K.

Social problems of all kinds follow from inequality. One simple measure of inequality is the ratio of income of the top 20% compared to the bottom 20% of the population. In Japan and Scandinavia, a typical ratio is that the richest fifth are four times better off than the poorest quintile. For Portugal and the U.S, the ratio is around 8, meaning that inequality is twice as great.

Wilkinson and Pickett make a compelling case that inequality has a destructive impact on many aspects of the quality of life. But why is this?

Why inequality is so socially corrosive

Interesting as the connection between social problems and inequality is, the likely underlying mechanisms are quite fascinating. Wilkinson and Pickett argue that in more unequal societies, there is greater anxiety about social evaluation.

They state:

Greater inequality seems to heighten people's social evaluation anxieties by increasing the importance of social status. Instead of accepting each other as equals on the basis of our common humanity as we might in more equal settings, getting the measure of others becomes more important as status differences widen. We come to see social position as a more important feature of a person's identity. Between strangers, it may often be the dominant feature. (p. 43)

Along with increased anxiety levels, more unequal societies undermine social trust and generate high levels of crime, violence, and mental illness and lose their effectiveness in education. Who can deny that we suffer more from these problems today than in earlier times, when this was a more egalitarian society having better opportunities for social mobility.

Highly unequal societies become dysfunctional. Wilkinson and Pickett highlight the response to Hurricane Katrina where state troopers strapped on weapons to shoot looters instead of rescuing people from roofs. One could point to many other symptoms from crumbling antiquated infrastructure to a government incapable of simple tasks such as funding its own activities.

In contrast, the health and happiness we associate with the American Dream are more typical of contemporary Japan and Scandinavia. The protesters may be short on solutions but they deserve credit for nailing the problem -- unbridled greed at the top making life unbearable for everyone.

1. Wilkinson, R., & Pickett, K. (2010). The spirit level: Why greater equality makes societies stronger. New York: Bloomsbury Press.