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It's not just income inequality that counts: nonmaterial redistribution is a key element in successful societies.

Anyone concerned with equality and poverty has likely heard of Richard Wilkinson and Kate Pickett's The Spirit Level. The first edition came out in 2009, with a second edition published at the end of 2010 by Penguin with the subtitle Why Equality is Better for Everyone. The authors have responded at length to criticisms of their analysis on the Equality Trust website and in the postscript to the second edition, and have made their graphs available online. As of September 2012, the book had sold more than 150,000 copies in English and was available in 23 foreign editions.

Despite efforts by conservative critics to discredit their data, on the whole their claims stand up. When it comes to physical and mental health, drug abuse, education, imprisonment, obesity, mobility, trust, violence, teenage pregnancy and child well-being, outcomes are significantly worse in more unequal rich countries than in more equal ones. Figure 1 sums up their findings.

We should not be surprised by these findings since the more egalitarian countries regularly come out on top in various cross-national indicators. For example, the 2013 edition of the UN's World Happiness Report ranks the more egalitarian countries at the top: among 156 countries, Denmark is first, Norway second, the Netherlands third, Sweden fifth, and Finland seventh as the best places to live in the world. (1)

In this sense the book makes an important contribution, drawing attention to the relationship between equality and well-being, bringing together a variety of useful facts and figures in one place. The authors have, by and large, effectively defended their claims, certainly well enough to satisfy readers favouring or at least open to greater equality. They have not, however, won over their critics. More significantly, there is little sign that they have won over policymakers in their own country, the United Kingdom, or elsewhere.

To convince those whose opinions count, correlations between outcomes must be accompanied by sufficiently persuasive explanations, explanations that take into account the effects of specific policy choices. The Spirit Level makes no real attempt to put forward such explanations, and this, I contend, is its intrinsic weakness.

Policy choices and outcomes

It is perhaps unfair to ask authors not trained in the social sciences to consider the work of social scientists. Yet it is their failure to consider what social sciences contribute that underlies both the book's popularity and its negligible influence on policymakers. The statistical correlations at the aggregate level between equality and various positive indicators are partly explained by the simple fact that, when there are fewer poor people, there are fewer unhappy, unhealthy, uninformed, violent and abused people. Beyond that, Wilkinson and Pickett's argument can be reduced to the broad assertion that greater inequality induces greater stress, which affects not only the poor but those afraid of being poor, or of being poorer than their neighbours.

Their explanations are usually insufficient; they conceal significant policy-related factors underlying the statistical correlations. For example, the authors explain why average working hours are lower in more equal societies by noting that the pressure to consume is greater in more unequal societies. Nothing about laws setting out maximum working hours, vacations, parental leave, sabbaticals and the like. To be able to include this dimension, one must have some familiarity with the relevant social science literature, which points us first toward conducive institutions, and then toward the cultural context of these institutions. In particular, it entails some knowledge of the societies with the lowest levels of inequality that drive the correlations: the Nordic countries and Japan.

In presenting their data, Wilkinson and Pickett stress a "really important implication ... [that] how a society becomes more unequal is less important than whether or not it actually does so." Insisting that Japan, with its low public expenditure, does best on many of the well-being indicators and is highly egalitarian allows the authors to reject the critique that their book is just another defence of the Scandinavian model, which they associate with high taxes and transfers.

Japan doesn't serve this purpose very well. Apart from the fact that its unique culture disqualifies it as a model that others can apply, by an alternate measure it turns out to be considerably less egalitarian than portrayed in figure 1. The ratio used in this figure is the ratio of the poorest to the richest 20 per cent. If instead we used the more common indicator of equality, the Gini coefficient (which Wilkinson and Pickett themselves use in their comparison of American states), Japan is among the less egalitarian countries (see figure 2). Worth noting also is that the World Happiness Report accords Japan a mediocre rank: 43rd, well below the U.K. (22nd) or the United States (17th).

Why the Nordics?

This leaves only the Nordics in the egalitarian/ high social well-being corner, followed by a few northern European welfare states. If, for example, we remove the four Nordics from the chart linking women's status to equality, no meaningful correlation remains. The same is true of most of the individual charts.

Consider gender equality, on which there is much to be found in the welfare state literature. Scandinavian culture is an explanatory factor, but a wide range of well-known policies are more significant: it cannot be simply that gender equality is a byproduct of more equal income distribution among households, as Wilkinson and Pickett imply. Or consider trust (as measured by the percentage saying most people can be trusted, as opposed to saying you can never be too careful). The authors present a lengthy argument seeking to link trust to equality; unfortunately their data show no trace of that relationship once the Nordics are removed from the chart.

A glance at the charts on the Equality Trust website shows that many of the positive correlations depend on the presence of the Nordics. Clearly, the path to interpreting the data passes in good part through the Scandinavian landscape, and through the policies that link material equality with the various positive social outcomes in these countries. On the basis of the literature, I identify the following policy choices at the core of the "Scandinavian model": (2)

* strong trade union and other popular representative organizations with structured input into relevant social and economic policy decisions;

* a strong social democratic party linked to the above, committed to low disparities in income, wealth and power;

* political institutions that are administratively decentralized and based on the principle of proportional representation, so that the strength of partisan representation reflects support in the population and necessitates some degree of structured cooperation in policymaking and administration at every level;

* productive industries capable of maintaining good but internationally competitive salaries and working conditions (driving out low-paying jobs, thus resulting in wage solidarity--the Rehn-Meidner model), necessitating a high level of structured cooperation between employers and trade unions in the labour market and a system of taxation that effectively taxes everyone employed;

* an education and training system that provides and upgrades the skills needed for employment in such rapidly changing industries;

* social and labour market policies based on the principle of universal services in health, pensions, unemployment insurance, child care--along with education and training, to complement retraining and mobility;

* an emphasis on the "nonmaterial" side of redistribution, via adult education, subsidies for study circles, support for public service media, newspaper subsidies, popular libraries.

It is of little use to policymakers elsewhere to point to the Nordics' achievements in reducing inequality without providing insight as to how they got there. Some of these features are present outside Scandinavia, and a few have diminished in importance among the Nordics--notably the second, as the social democratic parties have lost their quasi-hegemonic position. But the overall system has proven resilient.

My own contribution to this understanding is an elaboration of the last point: civic literacy based on nonmaterial redistribution. (3) Indeed, this is the real spirit level, the second side of the redistributive coin.

Nonmaterial redistribution

The Nordic countries score higher in civic literacy (the capacity of citizens to make sense of the political world and thus choose effectively among alternatives) than English-speaking and other European countries, and this correlates with relatively high levels of political participation. (4) High-civic-literacy countries achieve informed political participation notably among those who elsewhere tend to be excluded from the democratic political process, thus bringing their needs and interests to the attention of policymakers.

High civic literacy is the result of policies that attain "nonmaterial redistribution." They reduce disparities in not only material but also intellectual resources--via adult education, subsidies for study circles, support for public service media, popular libraries and the like and do so in the context of conducive political institutions. This in turn reduces economic inequality: bringing those at the lower rungs of society to higher levels of knowledge augments their economic position directly in the labour market, but also indirectly by enhancing their capacity to exercise influence over the selection of policies.

Figure 3 shows the relationship between the Gini measure of inequality and nonmaterial redistribution, measured by the ratio in average reading comprehension scores between those at the 90th and 10th percentile in the OECD's

International Adult Literacy Survey. Previous work I have done shows how the relationship between material and nonmaterial redistribution is manifested in political knowledge. (5) The countries with the lowest income inequality tend to be those where educational attainment least determines political knowledge. Countries with more developed welfare states tend to make greater efforts to disseminate information to those at the bottom. Conversely, in countries where those at the bottom are more politically informed, they are also more likely to effectively participate politically in support of appropriate redistributive policies.

The capacity of the Scandinavian social democratic welfare state to achieve relatively egalitarian outcomes depends on the capacity of "ordinary" citizens to better identify appropriate policies--and the actors to implement those policies. This takes place in the context of the consensual institutions outlined above: the "supply side" of civic literacy. In a complex, economically interdependent world, it is by no means self-evident just what the effects of particular choices will be. To make choices that reinforce the capacity to redistribute without undermining the capacity for the society to adapt to a changing technological and economic context requires appropriate information linking actors, policies, institutions and outcomes.

There are illustrations of this relationship in the data marshalled in The Spirit Level, for example with regard to mobility, a key indicator often used to justify material inequality in the United States. Wilkinson and Pickett show that the American Dream of high mobility is now just a dream. Yet they are puzzled by their finding that, though mobility is higher in the more egalitarian societies than in the United States, Scandinavians are more realistic about the--relatively weak--obstacles to social mobility in their society than Americans. The puzzle is resolved once we bring in the knowledge dimension: those in a high-civic-literacy society tend to be more perceptive about the existence of inequality. The same logic applies to their finding that young people in the more equal societies have more realistic employment aspirations.

This civic literacy dimension is missing in the explanation offered in The Spirit Level for the various social outcomes of interest. (6) "The biology of chronic stress," Wilkinson and Pickett suggest, "is a plausible pathway which helps us to understand why unequal societies are almost always unhealthy societies." It is through this pathway that an erosion of trust, increased illness and excessive consumption, among other things, develop in unequal societies. For them, the causal logic underlying these relationships is psychological:

   The further up the social ladder you
   are, the easier it becomes to feel a sense
   of pride, dignity and self-confidence ... Pride
   is the pleasure and shame, the pain
   through which we are all socialized ... Greater
   inequality seems to heighten
   people's social evaluation anxieties by
   increasing the importance of social status
   ... If inequalities are bigger, so that some
   people seem to count for almost everything,
   and others for practically nothing,
   where each of us is placed becomes more
   important. Greater inequality is likely
   to be accompanied by increased status
   competition and increased status anxiety
   ... Large inequalities produce all of the
   problems associated with social differences
   and the divisive class prejudices
   which go with them ... [Inequality] also
   weakens community life, reduces trust,
   and increases violence."


This simple logic is appealing but faulty. It assumes that the objective (statistical) level of inequality of a society corresponds to its subjective anxiety level as perceived by its inhabitants. The authors' own findings suggest that this is false, especially given the lack of fit between perception and reality when it comes to obstacles to social mobility and economic realities generally in the United States. It also fails to explain nonpsychological indicators of social well-being such as infant mortality.

But even in areas where differences can plausibly be attributed to status anxiety arising from inequality, there is a policy dimension related to civic literacy that cannot be ignored. Consider two of Wilkinson and Pickett's indicators that are less frequently discussed in the welfare state literature: obesity and teenage pregnancy. In the cross-national comparisons, the Nordic effect is especially strong when it comes to obesity. Eliminate Sweden, Norway and Denmark and the correlation between obesity and inequality almost disappears. Though not as dramatic, the same effect can be seen in relation to teenage pregnancy.

The authors' interpretation of these data is that stress, especially stress experienced by the poor, leads to "comfort eating" and teenagers having babies. Missing is any mention of sex education--access to which varies among American states and which has the intuitively expected impact on teenage pregnancy (7)--or the various Nordic sex education programs, which serve as a benchmark for the World Health Organization. (8) Similarly lacking is any mention of national differences in programs to make nutritious food and information about it available in schools and beyond. (9)

Oversimplifying a complex question

In these and other policy areas, the nonmaterial aspect is a sine qua non if favourable outcomes are to be attained. While nonmaterial redistribution policies to reinforce civic literacy are not the entire Nordic story, omitting them distorts the overall picture. A similar argument could be made for the values underlying certain policy choices that combine redistribution with economic growth. As noted by The Economist in a recent article,

   The World Values Survey, which has
   been monitoring values in over 100
   countries since 1981, says that the
   Nordics are the world's biggest believers
   in individual autonomy ... Any piece of
   Nordic social legislation--particularly
   the family laws of recent years--can be
   justified in terms of individual autonomy.
   Universal free education allows
   students of all backgrounds to achieve
   their potential. Separate taxation of
   spouses puts wives on an equal footing
   with their husbands. Universal day care
   for children makes it possible for both
   parents to work full-time. (10)


Does The Spirit Level add anything significant to what we know? The answer depends on who "we" are. The book was able to gain public attention not because of the quality of its analysis, but, in a sense, because of the opposite: its oversimplification of an important but complex question. The book generated critical responses that kept attention on the issue of equality. Because of this, the book, on balance, has served a useful purpose. But the real work, developing policies that effectively reduce inequality under existing constraints, has yet to be done.

Notes

(1) Canada, it might be added, places 6th. The report attempts to explain happiness levels in terms of six key variables: per capita income, healthy life expectancy, relationships, perceived freedom to make life choices, freedom from corruption and generosity.

(2) Henry Milner, "Can the Swedish Social Model Survive the Decline of the Social Democrats?", in Michael Keating and David McCrone, eds., The Crisis of Social Democracy? (Edinburgh, Scotland: Edinburgh University Press, 2013).

(3) Henry Milner, Civic Literacy: How Informed Citizens Make Democracy Work (Hanover, NH: University Press of New England, 2002).

(4) Ibid.

(5) Henry Milner and Kimmo Gronlund, "The Determinants of Political Knowledge in Comparative Perspective," Scandinavian Political Studies, Vol. 29, No. 4 (2006).

(6) The indicators of well-being Wilkinson and Pickett associate with material (income) equality are physical health, mental health, drug abuse, educational performance, imprisonment, obesity, social mobility, trust and community life, violence, life expectancy, infant mortality, teenage pregnancy, child well-being and conflict experienced by children.

(7) "Mississippi's teen pregnancy problem has gotten so out of control--they lead the nation in teen births--that legislators there have finally cracked and passed a law aimed at improving sex education in the schools. But the new regulations kowtow ... to anti-sex radicals ... The state's public school sex-ed instructors are specifically forbidden to show students how to use condoms, boys and girls must be separated for class ..., parents can opt out completely, and school districts were given the opportunity to choose an 'abstinence-only' curriculum--which the majority of them did" (Amanda Marcotte, "Why Are New York's Teen Birth Rates So Much Lower Than Mississippi's?", Slate, September 24, 2012, retrieved from slate.com/blogs/xx_factor/2012/09/24/ teen_pregnancy_and sex ed just_another_way_to_ measure the red state_blue_state_divide_.html).

(8) See Cornelia Helfferich and Birgit Heidtke, eds., Country Papers on Youth Sex Education in Europe (Cologne, Germany: World Health Organization Regional Office for Europe, 2006), retrieved from sexualaufklaerung.de/cgi-sub/fetch.php?id=489

(9) See World Health Organization Regional Office for Europe, Comparative Analysis of Nutrition Policies in the WHO European Region (Copenhagen, Denmark: Author, 2006), retrieved from euro.who.int/_data/assetslpdf_file/00041149782/ instanbul_conf_20ebd02.pdf

(10) "Lessons: The Secret of Their Success: The Nordic Countries Are Probably the Best-Governed in the World," The Economist, February 2, 2013, retrieved from economist.com/news/specialreport/21570835-nordic-countries-are-probably- best-governed-world-secret-their

Henry Milner is co-publisher of Inroads.

Richard Wilkinson and Kate Pickett, The Spirit Level: Why More Equal Societies Almost Always Do Better. London: Allen Lane, 2009. 330 pages.
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Title Annotation:POVERTY
Author:Milner, Henry
Publication:Inroads: A Journal of Opinion
Date:Jan 1, 2014
Words:2982
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