Poverty takes priority over inequality

That is what Professor Kate Pickett, Co-author of The Spirit Level implied at a recent bursting-at-the-seams lecture at University of Auckland on the ills of Income Inequality.

In a speaking tour with Professor Richard Wilkinson, she slated that the ‘naive view that poverty matters more than income inequality.

The “more accurate view” is that income inequality trumps all.

Why? Wilkson and Pickett argued that unequal incomes drive us to become more concerned about our socio-economic status, leading to a sense of inferiority and shame; stressing us out so much that our mental and physical health suffers.

Anxiety state

This ‘status anxiety’ affects all of us, not just the poor; inequality is killing us softly and we need to do something about it. The most memorable evidence offered for this at the lecture was a study that showed increased dopamine levels in dominant macaque monkeys, causing more submissive monkeys to become dependent on cocaine.

(I could not make this up).

Thankfully, more robust evidence bereft of primates was given too. Studies have shown that there does appear to be a solid link between status anxiety and poor mental well-being. Check.

There is also strong evidence that those on lower incomes experience status anxiety more often than those on higher incomes.

Robust association

So far so good, but it does not go far enough. If the ‘more unequal countries do worse than more equal ones’ thesis is to hold, we should see a robust association between income inequality and status anxiety.

But we don’t. The evidence is flimsier than Wilkinson and Pickett are willing to admit; the purported scientific consensus does not exist.

A 2013 study by Professor Richard Layte and Professor Christopher Whelan, designed to test The Spirit Level’s assertions examined this link. Results from Layte and Whelan’s work did not show that people in more unequal countries are necessarily more anxious about their status than those in more equal countries.

Weak links

There are other weak links in the broader argument. Income inequality and health outcomes do not match up as nicely as purported either.

In another study, published in the Oxford Handbook of Economic Inequality in 2009, researchers looked at data collected over time rather than the cross-country snapshots at one point in time used in The Spirit Level.

This study found that “the evidence suggests that the relationship between income inequality and health is either non-existent or too fragile to show up.”

Countries that became more unequal over time actually experienced greater improvements in health than countries where income inequality fell or remained roughly the same.

Intellectual honesty

Interestingly, one of the authors, Professor Andrew Leigh (now an Australian Labour MP), professed to be “about as anti-inequality an economist as you will find” and confessed that he was “secretly hoping to find that inequality was bad and wound up reluctantly reporting no such thing.” Such intellectual honesty is to be lauded.

We do not actually see a strong link between income and status either, in yet another blow to the argument. Take Japan for example. As a country with low-income inequality and good health outcomes, one would expect status to play a minimal role in society.

It is, instead, one of the most status-conscious, hierarchical societies in the world, where one’s age, sex, and occupation must be determined before a meal so that those of a lower status can defer rightly to those of a higher status, avoiding any awkward social faux pas in the process.

New Zealand Scene

Status matters, but not in the way in which Wilkinson and Pickett had theorised.

In New Zealand, income is not necessarily linked with status either, blue-collar workers like plumbers can earn decent coin but are not generally considered to standing victoriously atop the status ladder.

Ethnicity can also play a role. Indeed, ethnic composition better explains mortality figures than income inequality in New Zealand. Culture, history, and ethnicity all play a role in health outcomes. It is not just income inequality. One explanation for all of society’s ills does not rule them all.

The link between poverty and poor mental and physical health outcomes is, however, much stronger. Poverty is inherently unacceptable, particularly for our children, and demands our attention as the Child Poverty Action Group or the Children’s Commissioner will tell you.

Psychosocial outcomes

Policies designed to prevent the horrible outcomes known to be associated with poverty – any situation where a person lacks the social and material resources needed to participate in society – should be given precedent over the potential ‘psycho-social’ outcomes of status anxiety, which might be associated with income inequality.

Moral arguments against income inequality can still be made, especially by those who care deeply about social justice. Many are persuasive. There are also legitimate debates about how much inequality we as a society are willing to tolerate.

Reducing income inequality may even make us all better off as Wilkinson and Pickett argue. But for now at least, the evidence on the table is dodgy at best and misleading at worst.
Many eminent, left-leaning academics agree this is not an ideological thing, but scientific.

Status anxiety is not the smoking-gun rationale for equalising incomes that many proclaim it to be.

Until the evidence catches up with the rhetoric it’s more a distraction, a smokescreen shrouding and distracting us from what is truly blighting New Zealander’s lives, namely poverty.
Let us tackle the devil we know; we would be naïve not to do so.

Kieran Madden is a Researcher at Maxim Institute based in Auckland. The above article first appeared in the National Business Review.


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