As environmental, social and humanitarian crises deepen, the world can no longer afford two things: the cost of economic inequality and the wealthy. Between 2020 and 2022, the richest 1% of the world's individuals will generate almost twice as much new global wealth as the remaining 99% of individuals.1In 2019, it was equivalent to the carbon dioxide emissions of the poorest two-thirds of humanity.2In the decade leading up to 2022, the wealth of the world's billionaires more than doubled to about $12 trillion.
The evidence we and other social epidemiologists have gathered shows that high income inequality is a powerful social stressor that makes societies increasingly dysfunctional. For example, greater wealth disparities are associated with higher rates of homicide and incarceration. They are also associated with higher infant mortality, obesity, substance abuse, and COVID-19 deaths, as well as higher rates of teen pregnancy, child well-being, social mobility, and public trust.3,FourThe most unequal Western democracy, the United States, has a murder rate more than 11 times that of Norway (see go.nature.com/49fuujr), incarceration rates ten times higher, and infant mortality and obesity rates twice as high.
Reducing inequality benefits everyone, so why isn’t it happening?
These problems do not only hit the poorest, even though they are the ones most seriously affected. Even wealthy people would enjoy a better quality of life if they lived in a country where wealth is more equally distributed, like the Scandinavian countries. Their mental health would improve and they might be less likely to be victims of violence. Their children might do better in school and be less likely to take dangerous drugs.
The costs of inequality are also very high for governments: for example, the London-based charity Equality Trust (of which we are patrons and co-founders) estimates that the UK alone could save more than £100 billion ($126 billion) a year if it could reduce inequality to the average of the five OECD countries with the lowest income inequality (Denmark, Finland, Belgium, Norway and the Netherlands).FiveThis figure takes into account just four areas: increased years lived in perfect health, improved mental health, lower homicide rates, and lower incarceration rates.
Many commentators have focused on the need to limit economic growth and instead prioritise sustainability and environmental wellbeing.6,7Here we argue that tackling inequalities is the most important challenge for change: greater equality reduces unhealthy and excessive consumption, and fosters the solidarity and cohesion needed to make societies more resilient in the face of climate and other emergencies.
Social anxiety creates stress
The underlying reason why inequality has such profound and far-reaching effects is psychosocial. By highlighting differences in status and social class – for example, through the type of car people drive, the way they dress or where they live – inequality reinforces feelings of superiority or inferiority. The perception that some people are more deserving than others can undermine people's confidence and self-esteem.8And as research on cortisol responses shows, worrying about how others perceive you is a powerful stressor.9.
People queue up for food deliveries in Lagos, Nigeria.Credit: Temilade Adelaja/Reuters
They found that in unequal societies, rates of “status anxiety” rise across all income groups.TenChronic stress is well known to affect mortality, potentially doubling it.11Health-related behaviors are also affected by stress: diet, exercise and smoking all exhibit social gradients, but people are least likely to adopt a healthy lifestyle when they are stressed.
Violence and bullying are also linked to competition for social status. Aggression is often triggered by disrespect, humiliation or loss of face. Bullying among children is around six times more common in countries with high inequality.12In the United States, murder rates are five times higher in more unequal states than in states where wealth is more equally distributed.13.
Status drives consumption
Inequality also promotes consumerism: the perceived link between wealth and self-esteem leads people to purchase status products and thereby to feel more valued by others, as American economist Thorstein Veblen wrote more than a century ago. Theory of the leisure class (1899). Research has shown that people who live in unequal societies tend to spend more on status goods.14.
Our research shows that advertising spending as a percentage of gross domestic product is higher in countries with greater inequality. The lifestyles of the rich are widely publicized, promoting standards and lifestyles that others try to emulate, with knock-on effects on spending on vacation homes, swimming pools, holidays, clothes and luxury cars.
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According to an Oxfam report, the world's richest 1% of people produce, on average, 100 times more emissions than the poorest half of the world's population.15This is the scale of the inequality: when poor countries raise their material standards, rich countries are forced to lower them.
Inequality makes environmental policies difficult to implement. When people feel the burden is not being shared fairly, change is resisted. For example, in 2018, Yellow vest The “yellow vest” protests erupted across France in response to President Emmanuel Macron's attempt to impose an “eco-tax” of a few percent on gasoline prices. The proposed tax was widely seen as unfair, especially by the rural poor, for whom diesel and gasoline are essential commodities. By 2019, the government had withdrawn the plan. Similarly, truck drivers in Brazil disrupted roads and supply chains in 2018, protesting against higher fuel taxes.
So do unequal societies perform worse on the environment? Yes. In wealthy, developed countries where data is available, we find a strong correlation between levels of equality and scores on indicators measuring performance in five environmental areas: air pollution, waste recycling, rich country carbon emissions, progress towards the UN Sustainable Development Goals, and international cooperation (UN treaties ratified and avoidance of unilateral coercive measures).
This correlation clearly holds when social and health issues are also taken into account (see “Unequal outcomes”). To show this, we combine the Environmental Performance Index with another previously developed index that considers 10 social and health issues: infant mortality, life expectancy, mental illness, obesity, educational attainment, teenage births, homicide, incarceration, social mobility and trust. There is a clear trend towards more unequal societies scoring worse.
Source: Analysis by RG Wilkinson and KE Pickett
Other studies have also shown that more equal societies are more cohesive and have higher levels of trust and participation in local groups.16Additionally, compared with wealthier, less equal countries, 10% to 20% of the population in more equal countries believe that environmental protection should be prioritized over economic growth.17More equal societies also perform better on the Global Peace Index (which ranks countries on their peacefulness) and give more foreign aid: While the UN target is for countries to devote 0.7% of their Gross National Income (GNI) to foreign aid, Sweden and Norway each give about 1% of their GNI, compared with 0.5% in the UK and just 0.2% in the US.
Policymakers must act
Scientific evidence clearly shows that reducing inequality is a fundamental prerequisite for addressing the environmental, health and social crises facing the world. It is essential that policymakers act swiftly to reverse decades of growing inequality and curb top income growth.
First, governments should opt for progressive taxation, which reduces inequality by shifting the economic burden from low-income earners to high-income earners and pays for the infrastructure needed for the world to transition to carbon neutrality and sustainability. Governments may baulk at this proposal, but there is still plenty of room for improvement. For example, tax rates on the highest income earners in the United States were well above 70% for about half of the 20th century, far higher than today's top tax rate of 37%. To solidify public support, governments need to make a strong case that society as a whole should contribute to funding the clean energy transition and health improvements.
To build a better world, stop chasing economic growth
We need international agreements to close tax havens and loopholes. Corporate tax evasion costs poor countries an estimated $100 billion a year, enough to cover the extra cost of educating 124 million children and perhaps prevent 8 million maternal and child deaths a year. OECD countries suffer more than two-thirds of these tax losses, according to the Tax Justice Network, an advocacy group in Bristol, UK. The OECD estimates that low- and middle-income countries lose three times as much money in tax havens as they receive in foreign aid.
Although untested, the benefits in discouraging consumption of a consumption tax calculated on personal income minus savings should also be considered. Unlike value-added or sales taxes, such a tax could be made highly progressive. Bans on advertising of tobacco, alcohol, gambling and prescription drugs are common internationally, but a tax restricting advertising more generally would help to reduce consumption. Energy costs could also be made progressive, with a higher per-unit tax the more consumed.
Laws and incentives are also needed to ensure that the big companies that dominate the world economy are run more fairly. For example, business practices such as employee ownership, representation on boards of directors, share ownership, mutuals and cooperatives tend to reduce the scale of income and wealth inequality. In contrast to the 200:1 ratio reported by one analyst for pay levels in the 100 largest companies listed on the FTSE 100 stock index (see go.nature.com/3p9cdbv), the Spanish cooperative group Mondragon has an agreed maximum ratio of 9:1. And these companies perform better in terms of ethics and sustainability: the Mondragon Group was ranked 11th in the 2010 Workforce Survey. luck The magazine's 2020 “Change the World” list recognizes companies that are implementing innovative business strategies that are making a positive impact on the world.
Reducing economic inequality is not a panacea for health, social and environmental problems, but it is a central component of solving all of them. Increased equality brings the same benefits to society no matter how it is achieved. Countries that adopt a multipronged approach will progress furthest and fastest.
