Yes, we are all in this together

Since it was first published, <em>The Spirit Level</em> has won admirers including Ed Miliband and D

Our book The Spirit Level was first published in March 2009, about six months after the start of the worst financial crisis since the Second World War. Much of the blame for the crisis was rightly attributed to extraordinary risks taken by people in the financial sector whose excesses were matched only by their grotesquely high salaries. Although our research pre-dates the crisis by many years, the book's generally positive reception clearly owes something to its timing. Many people who, before the crash, had assumed that huge salaries and bonuses reflected the unique contributions and brilliance of their recipients changed their minds as they learned about the lack of relationship between performance and reward.

But the reception of the book cannot be attributed wholly to the moment at which it appeared. Since its publication, we have given well over 350 lectures in many different countries. Although we have often been invited to speak to groups that were predisposed to be sympathetic to the idea of greater equality, that has not always been the case. Yet audiences have been so uniformly positive as to suggest that there is a hunger for the evidence we present - as if, under the surface, the world was full of closet egalitarians.

A recent report confirms empirically the impression we have formed - that the general public is averse to the high levels of inequality in very unequal countries. In a random sample of more than 5,500 Americans, researchers from Duke and Harvard Universities investigated views of the distribution of wealth (rather than income) in society. People were shown three pie charts illustrating three different distributions of wealth - one in which each fifth of the population got the same, another that showed (unlabelled) the distribution of wealth in the United States and another (also unlabelled) based on the distribution in Sweden.

Ninety-two per cent said they would prefer to live in a society with the Swedish distribution - and the percentage only varied from 89 to 93 per cent depending on whether they were rich or poor, Democrats or Republicans. When asked what they thought the distribution of wealth is in the US, the average estimate was that the richest 20 per cent of Americans control 59 per cent of the wealth. In reality, they control 84 per cent. Asked what they thought the ideal distribution would be, people preferred the top 20 per cent to have 32 per cent of all wealth.

Nevertheless, The Spirit Level has also attracted criticism and has been the subject of strident political attacks. Some reviewers of the book were not convinced we had shown that the vast majority of the population benefited from greater equality. They seemed to think that the evidence did no more than establish that average performance across the whole population is worse in more unequal societies. In one section, we show no fewer than five sets of data illustrating that, whether you classify people by education, social class or income, people in each category are healthier (or have higher literacy scores) if they are in a more equal society than people in the same category of income, education or class in a less equal society. We also refer to studies that reach the same conclusions using statistical models that enable researchers to look at the effects of inequality after controlling for the effects of all individual incomes throughout society.

We do not argue that everyone in a more equal society does better than everyone in a less equal one. We are not saying that even the lowest social class or the least well paid or educated category in a more equal society does better than the highest category in a less equal society. Rather, we show that when people in the same social class, at the same level of income or education, are compared across countries, those in more equal societies do better. So, at any given level of personal income or education, someone's quality of life will be higher if he or she has the same level of income or education but lives in a more equal society. The conclusion is that greater equality usually makes most difference to the least well off, but still produces some benefits for the well off.

The ties that bind

Since we finished writing The Spirit Level in the spring of 2008, there have been many more studies reporting relationships between inequality and health. Nine of the new studies look specifically at rich, developed countries. Seven find, as we do, that health is worse in more unequal societies. Both of the ones that differ look at income inequality in relation to self-reported health - where, instead of death rates, people are typically asked to say whether their health has recently been excellent, good, fair or poor. Although self-reported health is predictive of longevity within a country, comparisons between countries find that self-rated health is actually better in countries where life expectancy is lower: so rather than contradicting the relation between greater inequality and worse health, the studies of self-reported health tell us something about the way people perceive their health. But why is self-rated health not related to levels of actual health in cross-country comparisons? Could it be that, in more unequal societies, with more status competition, asserting that one has excellent or very good health might be part of maintaining a hardier self-image? Or perhaps people in more equal societies are less inclined to rate themselves at the top of a scale? We can only guess.

Throughout The Spirit Level, we also discuss the vital importance of social relationships to human health and well-being and show that higher levels of income inequality damage the social fabric that contributes so much to healthy societies. Now, a major new review of the evidence from almost 150 studies confirms the important influence of social relationships on health. People with stronger social relationships were half as likely to die during a study's period of follow-up as those with weaker social ties. The authors of the report found that the influence of social relations on survival was at least as important as that of smoking, and much more important than heavy drinking, physical activity or obesity. The effects were strongest when researchers combined measures of different kinds of relationships, such as marital status, feeling lonely, size of social network, participation in social activities, and so on.

We also showed that there is a large and consistent body of evidence on income inequality and violence. More recent studies continue to confirm this link. One study of 33 countries, published in 2010, also showed that social cohesion - as measured by levels of trust - seemed to provide the causal link between income inequality and homicide rates, whereas public spending on health and education did not.

The weight of the evidence, and its continued rapid accumulation, make the important link between income inequality and social dysfunction inescapable. But ill-founded and politically motivated criticism can muddy the waters and leave people with the impression that the evidence is less clear than it is. Imagine if someone were to assert (with no justification whatsoever) that climate science had not taken account of, say, the effects of variations in the salinity of different oceans. Unable to evaluate this claim, the inexpert listener might assume that it was an important factor, and that perhaps it had not been properly considered.

What often appears to be "balanced" discussion in the media can be misleading. This happens even in areas of science where the accumulation of evidence leaves little legitimate room for doubt. For example, if 98 per cent of climate change scientists agree on an issue, and 2 per cent disagree, inviting one person from each camp to take part in a news programme or public debate can leave people with an impression that the matter is much more controversial than it is. Only those viewers or readers who are particularly diligent or highly motivated will be able to pursue the issues in detail.

In their book Merchants of Doubt, the American academics Naomi Oreskes and Erik Conway suggest that the defence of a kind of free-market fundamentalism is the most plausible explanation of why the same individuals and institutions are often involved in attacks on research in areas as diverse as tobacco control and the evidence on climate change. As well as defending the free market, they see themselves as countering tendencies to big government and protecting democracy. The same beliefs are likely to guide the attacks on the evidence of inequality's socially damaging effects.

If that is the motivation, then it is based on a serious misconception, one that is almost the opposite of the truth. Greater inequality, on the contrary, increases the need for big government - for more police, more prisons, more health and social services of every kind. Most of these services are expensive and only very partially effective, but we shall need them for ever if we continue to have the high levels of inequality that create the problems they are designed to deal with. Several states of the US now spend more on prisons than on higher education. In fact, one of the best and most humane ways of achieving small government is by reducing inequality. Similarly, the assumption that greater equality can only be achieved through higher taxes and benefits, which presumably led the Taxpayers' Alliance to publish its criticism of The Spirit Level, is also a mistake. We have been at pains to point out that some societies achieve greater equality with unusually low taxation because they have smaller earnings differences before taxes.

There are few things more corrosive of a properly functioning democracy and of the market than corruption and unbridled greed. Although the international measures of corruption currently available were designed primarily to assess levels of corruption in poorer countries, they strongly suggest that one of the likely costs of greater inequality is increased corruption in government and society more widely. We show in the book that trust and the strength of community life are weakened by inequality, and this is true not only of interpersonal trust, but also of trust in government - the difference between the attitudes of Americans and Scandinavians to their governments is well known.

In addition, international data suggests that people trust government less in more unequal states. There is also evidence from societies where voting is not compulsory (as it is, for instance, in Australia) that voter turnout may be lower in more unequal countries. Whether or not this reflects a greater separation of interests and an increasing sense of "us and them" between people at opposite ends of the social ladder, it certainly suggests that too much inequality is a threat to democracy.

Economists sometimes suggest that the market is like a democratic voting system: our expenditure pattern is, in effect, our vote on how productive resources should be allocated between competing demands. If this is true, someone with 20 times the income of another in effect gets 20 times as many votes. As a result, inequality gravely distorts the ability of economies to provide for human needs: because the poor cannot afford better housing, their demand for it is "ineffective", yet the spending of the rich ensures scarce productive assets are devoted instead to the production of luxuries.

As well as these more general effects of large income differences, there is now evidence that inequality played a central causal role in the financial crashes of 1929 and of 2008. We suggested that inequality leads to increases in debt. It turns out that they are intimately related. Using figures for the 40 years from 1963 to 2003, the economist Matteo Iacoviello has recently shown a very close correlation between increasing debt and increasing inequality in the US and concludes that the longer-term increases in debt can only be explained by the rise in inequality. Using the latest international data on debt from the Organisation for Economic Co-operation and Development, we have also found that both short-term household debt as a proportion of household assets and government national debt as a proportion of gross domestic product are higher in more unequal countries. The crashes of both 1929 and 2008 happened at the two peaks of inequality in the past hundred years after long periods of rising inequality which had led to rapid increases in debt. Their trends over time are strikingly similar. It has been estimated that growing inequality meant that, in the years before the 2008 crash, about $1.5trn per year was being siphoned from the bottom 90 per cent of the US population to the top 10 per cent.

As a result, the richest people had more and more money to invest and to lend, but people outside the very wealthiest category found it increasingly difficult to maintain their relative incomes or realise their aspirations. Both for speculators and for ordinary householders, rising property prices made investment in property look like a bandwagon everyone had to get on. People bought into the housing market wherever they could and remortgaged precariously as prices rose. The financial sector handling and speculating on these debts found its share of all US corporate profits rising from 15 per cent in 1980 to 40 per cent in 2003. The bigger the bubble grew, the worse its eventual and inevitable burst became.

A question of preferences

Earlier, we cited research showing that over 90 per cent of the American population say that they would prefer to live in a society with the income distribution that exists in Sweden rather than that of the US. Research in Britain also shows that people think income differences should be smaller, even though they hugely underestimate how large they are. The world really is full of people who have much more egalitarian preferences and a stronger sense of justice than we tend to assume. However, the rise of neoliberal political and economic thinking in the 1980s and 1990s meant that egalitarian ideas disappeared from public debate and those with a strong sense of justice became, in effect, closet egalitarians.

It is now time egalitarians returned to the public arena. We need to do so confident that our intuitions have been validated and found to be truer than most of us ever imagined. Because the evidence shows that few people are aware of the actual scale of inequality and injustice in our societies, or recognise how it damages the vast majority of the population, the first task is to provide education and information.

Understanding these issues is already changing attitudes to inequality among politicians. In Britain, The Spirit Level has been endorsed across the political spectrum. In a major speech at the end of 2009, David Cameron said the book showed "that among the richest countries, it's the more unequal ones that do worse according to almost every quality-of-life indicator". In September this year, in his first major speech as leader of the Labour Party, Ed Miliband said: "I do believe this country is too unequal and the gap between rich and poor doesn't just harm the poor, it harms us all . . ."

Words are a start, but changing policies and politics, changing the way our societies organise themselves, will require the evidence to be recognised even more widely. Few tasks are more worthwhile than this: as we think The Spirit Level shows, the health of our democracies, our societies and their people, is truly dependent on greater equality.

Extracted from a new and updated edition of "The Spirit Level: Why Equality Is Better for Everyone" by Richard Wilkinson and
Kate Pickett (Penguin, £10.99). To buy the book at a special offer price of £8.99, call the Penguin Bookshop on 08700 707 717 and quote "NS/Spirit" and the ISBN: 978-0-241-95429-4