Inequality was similar, or higher, in ancient times than it is today

I'm really enjoying my study leave, because it's giving me the opportunity to catch up on reading some papers that have been sitting on my must-read-soon pile, in some cases for years. This paper (pdf), by Branko Milanovic (World Bank), Peter Lindert (University of California, Davis), and Jeffrey Williamson (Harvard), entitled "Measuring Ancient Inequality" is one example.

If you're interested in inequality, or interested in economic history, the paper is a good read and provides some interesting insights (which I note that the authors have followed up in some subsequent publications, which I might talk about in a later post). The authors use data from social tables for 14 societies spanning from Rome (14 C.E.) to British India (1947), and a combination of Gini mesaures of inequality along with two new measures they term the inequality possibility frontier and the inequality extraction ratio.

They find:

First, as measured by the Gini coefficient, income inequality in still-pre-industrial countries today is not very different from inequality in distant pre-industrial times. In addition, the variance between countries then and now is much greater than the variance in average inequality between then and now. Second, the extraction ratio – how much of potential inequality was converted into actual inequality – was significantly bigger then than now. We are persuaded that much more can be learned about inequality in the past and the present by looking at the extraction ratio rather than just at actual inequality...

Third, differences in lifetime survival rates between rich and poor countries and between rich and poor individuals within countries were much higher two centuries ago than they are now, and this served to make for greater lifetime inequality in the past. Fourth, unlike the findings regarding the evolution of the 20th century inequality in advanced economies, our ancient inequality sample does not reveal any significant correlation between the income share of the top 1 percent and overall inequality. Thus, an equally high Gini could and was achieved in two ways: in some societies, a high income share of the elite coexisted with a yawning gap between it and the rest of society, and small differences in income amongst the non-elite; in other societies, the very top of income pyramid was followed by only slightly less rich people and then further down toward something that resembled a middle class... 

The frequent claim that inequality promotes accumulation and growth does not get much support from history. On the contrary, great economic inequality has always been correlated with extreme concentration of political power, and that power has always been used to widen the income gaps through rent-seeking and rent-keeping, forces that demonstrably retard economic growth. 

In other words, inequality within societies was similar in the past to what it is today, even though incomes were much lower then. But when you take into account life expectancy, inequality is much lower now than in the past. Although I'm not sure that a long life in abject poverty is necessarily an improvement on a short life in abject poverty. The final point is important though - there is little support for the conjecture that inequality promotes growth, and the reverse is likely.