Premature evaluation – The Spirit Level

Richard Wilkinson and Kate Pickett’s The Spirit Level is a vigorous polemic for social democracy, something we’re probably in need of as the neo-liberals recover from the 2008 experience.

Unlike most such, this one is based on data – specifically, a whole battery of socioeconomic indicators that turn out to be strongly correlated with income inequality. In fact, the paperback comes with a handy table of the R-squareds and p-values of all the indicators used, which range across life expectancy, imprisonment per capita, patents issued per capita and much else. Everywhere, it seems, more egalitarian societies tend to do better.

This observation is rather more impressive than quite a bit of the book – there’s too much back-of-a-fag-packet neuroscience of the sort that actual neuroscientists run a mile to avoid about mirror neurons and such, as well as a fair bit of 1970s-ish romanticisation of the supposedly ideal status of hunter-gatherer societies. Steven Pinker’s work on the history of violence hasn’t landed here; in places it’s almost nostalgically sweet.

The data, however, speaks for itself. It’s true that quite a few of the charts derive a lot of their correlation from a few outliers, but the outliers invariably point to the same results – specifically the United States, which reliably turns out to have truly awful results for many, many tests – and also very high inequality. Similarly, there are a whole string of statistics that are driven by a group of post-Soviet states that turn out to be dramatically unhappy, conflicted, violent, unhealthy, etc for their level of income; of course, these societies underwent a historic explosion of inequality.

Many of the results have been checked by carrying out the same analyses with the 51 US states, which gives rise to the same conclusion and another crop of interesting outliers. The states of the Deep South are reliably terrible. They are highly unequal, and they get the effects – but they are far off to the top right of the trendline. In a sense, their marginal productivity in terms of inequality is unusually high – for every extra point on the Gini coefficient, they manage to produce a sharply higher degree of suffering than the national average.

On the other hand, there’s the importance of being urban. The more metropolitan the state, the less it suffers from the impact of inequality – New York has the social problems of the average, despite being very unequal. And there’s the Alaskan question.

The Alaskan question? Many people on the left are keen on the idea of a citizens’ basic income, and oddly enough, there is one territory with one in this study. Alaska, famously, distributes its oil revenues equally among the citizenry, and is therefore the most equal society in the United States. However, it also succeeds in being reliably among the worst on every other measure you can think of. Clearly, the statecraft of Sarah Palin must have some impact, but it’s equally clear that it can’t be the whole explanation.

Unless there is some huge missing factor that invalidates the whole data set, we have to consider that this particular basic income experiment has failed to deliver the benefits of equality. Alaska is, of course, a very special and atypical place – but it’s not that different to, say, Norway, another sparsely populated, mountainous, northern territory bordering on Russia whose economy is heavily influenced by oil and gas, forestry, fishing, and metals and whose government decided to take a radical approach to the oil revenues, and where a lot of people own guns. And Norway is both very egalitarian and reliably in the very top of all the metrics in The Spirit Level.

Perhaps the answer is precisely that the Alaskan basic income is free money? Despite all the stuff about mirror neurons, etc, etc, it seems that the trade secret of equality is – equality. It takes a long time for Wilkinson and Pickett to get to this, but the difference between handing out oil windfalls and real egalitarianism is that only one of them is founded on a different balance of power between classes. A lasting reduction of income inequality must be founded in a lasting reduction in the inequality of political power – otherwise it may not last, and it may not even have much effect.

Another interesting point is that changes in relative economic success among nations seem to have little effect on human happiness or security. Obviously, a total crash will do it. But once a certain threshold level of per-capita GDP is passed, Wilkinson and Pickett argue, pushing into the G8 doesn’t change much. They therefore argue that economic growth is useless. However, they then note that a whole range of their metrics, like life expectancy, do seem to go up a percentage point or two a year in the rich nations anyway. Which sounds a lot like growth.

It might be more accurate to say that growth relative to other industrialised states is not particularly important within the normal range of variation, although in absolute terms it is. However, the chart in question is quite heavily driven by the US outlier – which suggests that the costs of enough inequality will essentially swallow all your economic growth.

Eventually, the upshot of TSL is that the world, and especially China, needs trade unions.

  1. Cian

    Steven Pinker’s work on the history of violence hasn’t landed here

    Probably for the best. Its very cartoonish. But then he’s an evolutionary psychologist, so I guess that goes with the territory.

  2. Luis Enrique

    have you seen Lane Kenworthy’s look at this book?

    I am really baffled by the “growth doesn’t cause happiness therefore growth in useless” varieties of argument. Lots of useful things don’t increase happiness. I’d like to see us get richer (i.e. increase productivity) so we can spend a lot more on good things like environmental protection, sustainable energy, and better social services, better facilities for asylum seekers etc. etc. in a politically feasible way (i.e. without asking people to consume much less of other things).

    [N.B I’m not writing this because I don’t believe inequality has bad consequences]

  3. Guy

    “Eventually, the upshot of TSL is that the world, and especially China, needs trade unions.”

    Agree, trade unions are essential.

    But, seen this?:

    Be interested in your thoughts (there’s lots more on the blog).

  4. Cian

    I think there are two anti growth arguments. The first is actually pretty sophisticated, the second is kind of an outgrowth of hippydom.

    The sophisticated one has two parts:
    a) GDP is a really gross measure, which was never intended for the purposes to which it is now put and does a very bad job of measuring the stuff we care about. It just measures spending, without really addressing is that spending efficient (the US health system greatly increases their GDP, and is clearly grossly inefficient), or a good thing (bribes on politicians, clearing up after pollution that could have been more cheaply prevented, spending on homeopathy, etc, etc).

    b) There is an environmental limit on how much economies can grow, but unfortunately the structure of our economies (debt based) means that you need growth otherwise the whole thing collapses (zero growth in a capitalist society feels like a recession and in the long term is probably unsustainable).

    The problem is that this sophisticated argument has been parsed by a lot of people, and then simplified until it loses these key things. Its not helped by the fact that wealth is hard thing to measure, whereas GDP is easy, which is why we do it. However just because something is easy, doesn’t mean that you should…

    A better argument would be that:
    growth in GDP growth in wealth. Indeed you could through efficiencies reduce GDP, but grow wealth.

    And we should all be focusing on the latter, not the former.

  5. Cian

    Guy, have you looked at the rest of the guy’s blog? He’s an ultra-Chicago school free-marketeer who works for a free market Wank Tank. So while that doesn’t invalidate his argument, you know what his answer is going to be on any question.

    I don’t have a position on Richard Wilkinson’s book, and I don’t have the time to properly evaluate their studies. From what I’ve seen of them, they are fairly careful and take pains to address many of the problems that occur with this kind of work. However this kind of work is pretty problematic, and given they have what is essentially mono-causal it has to be flawed – that simply goes with the territory. However Tino Sanandaji’s critique is at the level of a not terribly bright (but extremely arrogant) undergraduate. And what kind of amateur critiques the popularisation?

  6. This is worth reading:

    David Runciman reviewing The Spirit Level.

    (Runciman is a very serious intellectual; an extremely impressive and wide-ranging Cambridge academic who is friendly to the aims of TSL but critical of its methods and some of its angles of attack).

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: