When I cover inequality with my ECONS102 class, we talk about some of the many problems that have been associated with inequality, such as unequal access to political representation, lower social cohesion, and less interaction between increasingly segregated social groups. I also talk about the theory that links higher inequality with lower economic growth, though noting that the research is far from settled on that issue (see here and here, for example).
In that class, I don't discuss the research linking inequality with lower physical or mental health. That goes back to my objections to the Wilkinson and Pickett book The Spirit Level (which I discussed here). It turns out that might have been a good choice, at least in terms of mental health.
This recent article by Nicolas Sommet (Université de Lausanne) and co-authors, published in the high-profile journal Nature (ungated earlier version here), presents the results of meta-analyses of the relationship between inequality and subjective wellbeing, and inequality and mental health. Meta-analysis is a way of combining the results of many studies to generate an estimate of the overall effect size.
Their meta-analysis of inequality and subjective wellbeing included 152 estimates from 100 different studies, and they found that inequality was not significantly associated with subjective wellbeing. Their results were qualitatively the same whether subjective wellbeing was measured as life satisfaction or happiness, and did not depend on study quality. That is worth noting, given that about 80 percent of the studies included in the two meta-analyses were judged to be at high or very high risk of bias.
Sommet et al.'s meta-analysis of inequality and mental health included 99 estimates from 75 different studies, and they found a small negative association between inequality and mental health. Specifically:
A 0.05-point increase in the Gini coefficient predicted a 4% (1/0.961) increase in the odds of experiencing a mental-health issue.
The Gini coefficient measures inequality on a scale of 0 to 1, and a 0.05-point increase is similar to the difference between New Zealand (0.326, above the OECD average) and Denmark (0.276, close to the lowest inequality among OECD countries - see Figure 6.1 in this report). Similar to subjective wellbeing, the results were qualitatively the same whether mental health was measured as depression or 'other mental disorders', and did not depend on study quality. The effect was larger when inequality was measured at the 'macro level', meaning the country level (or large subnational areas with populations over one million), although the effect was also statistically significant when inequality was measured at the 'meso level' (small subnational areas, such as counties).
Not so fast, though. After correcting for publication bias (the tendency for statistically significant results to be more likely to be published), Sommet et al. find that, for mental health:
The median bias-corrected estimate was OR+0.05 = 1.018 (0.986–1.051), P = 0.266, thereby confirming the lack of a significant association after correcting for publication bias.
Moreover, Sommet et al. conduct a specification-curve analysis, which tests how sensitive the results are to different modelling choices. They find that their conclusions are robust across approximately 95 percent of 768 alternative model specifications.
The overall result is that inequality is not statistically significantly associated with either subjective wellbeing or mental health, at least not robustly so. However, Sommet et al. then dig a little further, finding some interesting differences in the estimated effects across countries with different characteristics. First, for mental health, they find that the negative association is significant in lower-income samples, but not in higher-income samples. They replicate this result using data from the Gallup World Poll, using average national income to distinguish between lower- and higher-income countries. They explain this as suggesting that:
...inequality may be particularly harmful to low-income populations, possibly by undermining community cohesion... fostering adverse social comparison... or fuelling perceptions of unfairness...
Second, for subjective wellbeing they find that there is a negative association with inequality in high-inflation countries, but a positive association with inequality in low-inflation countries. They also replicate this finding using data from the Gallup World Poll. They explain this in the following way:
Rising costs of living drive distress... and inequality may exacerbate the burden of inflation by increasing social discontent and resentment. Conversely, when prices are stable, inequality might be interpreted as a signal of future economic mobility and foster hope... That is, inequality may only harm well-being under degraded economic conditions (here, high inflation) and have positive effects under others (low inflation).
Their explanations are speculative, and I would be cautious about over-interpreting the mechanisms underlying these latter results. Nevertheless, the fact that both findings were replicated using the Gallup World Poll should provide some comfort about the results. Overall, the results of this meta-analysis can be taken to mean that, while there may be a relationship among some subgroups or some countries at some points in time, there is not a robust overall association between inequality and lower subjective wellbeing or worse mental health.
[HT: Marginal Revolution, last year]
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