Yves here. This humble blog, since its inception, has documented how highly unequal societies, in terms of income and wealth, produce worse results than those with lower inequality. Nations with highly concentrated economies and incomes set the cost of living even for the rich. They are not very happy. They have negative effects on other social indicators, from educational attainment to crime to fertility.
The authors below argue that people have strong needs for fairness, which they translate into choosing equality. Not only people:
But in this simple context, fairness and equality are the same. It is not clear how justice can be achieved in an acceptable and cost-effective or legal way in complex societies where there are large differences in their levels of functioning and their access to help. Think about the criminal justice system. Imagine what happens when a poor person is accused. He thinks that most public defenders, who are woefully underpaid and burdened with serious cases, can do anywhere near as good a job as a high-level criminal defense attorney.
By Mark Glick Professor, University of Utah, Gabriel Lozada, Professor of Economics, University of Utah, and Darren Bush, Professor, The University of Houston Law Center Faculty. Originally published on the website of the Institute of New Economic Thinking
Equality goes deeper than economics textbooks or policy fads. Across the board, evidence is increasingly linking egalitarian societies to strong welfare, greater social trust, and healthy democracy, challenging the assumption that fairness must come from prosperity or economic power.
Our new INET Working Paper argues that equality—especially equality of opportunity—should serve as a central goal of public policy. Based on evolutionary biology, anthropology, moral philosophy, epidemiology, and economic history, we show that people are tightly integrated to create justice and that societies characterized by high inequality produce proportionally less well-being. We reject the long-standing economic claim that equality comes from efficiency, showing instead that more equal societies tend to do better than unequal ones.
We begin the article with the basics of evolution. For most of human history, people lived in small, cooperative and mostly egalitarian groups. Anthropological evidence from hunter-gatherer societies suggests that these groups enforced sharing norms, punished free riders (not everyone was equal or equal), and resisted hierarchy. Evolutionary scientists and psychologists characterize this social behavior as “dynamic matching,” which is the tendency to cooperate and punish those who violate the norms of cooperation, even at the expense of the individual.
Experimental economics reinforces these findings. In games of end and public goods, individuals sacrifice material gain to punish injustice. Neuroscientific research shows that being treated fairly activates the brain’s reward centers, while injustice triggers regions associated with disgust and anger. Even infants show an early bias toward equal distribution.
These scientific findings directly challenge the narrow view of human motivation embedded in Neoclassical economics, which treats individuals as self-interested producers. We argue that public policy consistent with our biologically determined moral sense—especially aversion to inequality and exploitation—will both command democratic legitimacy and promote social welfare.
We then place equality at the center of modern moral philosophy. Although philosophers disagree what must be equal—welfare, resources, skills, or primary goods—many begin on the basis of moral equality. Thinkers such as John Rawls, Amartya Sen, Ronald Dworkin, and GA Cohen converge on the importance of respect and equal opportunity. Rawls’ difference principle allows for inequality only if it benefits the least. Sen’s skill approach shifts the focus from income to greater freedom—the real possibilities people have. Dworkin argues for a distribution that is sensitive but not endowment-sensitive, which compensates for luck while honoring effort.
We emphasize that even utilitarianism—the historical foundation of economic principles—contains egalitarian roots, since diminishing marginal utility means that redistribution increases total welfare. However, modern economics has abandoned these features, replacing social comparisons between people with Pareto optimality and Kaldor-Hicks criteria (note, not “criteria”), all of which hide distributional effects.
States that applaud recent efforts to focus public policy on greater output or greater GNP per capita or greater “abundance” often base their arguments on the myth of a trade-off between equity and efficiency. But there is no concrete evidence for that claim: on the contrary, more egalitarian societies achieve equal or greater economic performance. Alternatively, these arguments may be based on the assumption that the benefits of output accrue to the entire population; but that assumption is rarely accepted and cannot be supported by conclusive evidence.
Although these arguments may assume that the distribution does not matter; but this paper shows that it does more. Some of these arguments may rest on the defeatist assumption that it is impossible to change the distribution of income or wealth within our existing capitalist framework, because such distribution is determined by economic laws that social policies cannot affect. But we show, on the contrary, that such a distribution is strongly influenced, in both directions, by public policy. Finally, these arguments may assume, arguably, that future growth in productivity will be automatically distributed more evenly than output has been distributed in recent decades.
Empirical evidence continues to support equity as a policy goal. The Easterlin Paradox shows that in rich countries, an increase in GDP per capita does not increase happiness. Specifically, Easterlin showed that happiness in the United States had been on a downward trend since 1946, while GDP per capita was growing rapidly. Even more surprising, epidemiological studies show that income inequality is strongly associated with social ills: low trust, high homicide rates, worse health outcomes, reduced social mobility, obesity and mental illness, and shorter life expectancy.
Across rich countries and US states alike, inequality is associated with this disadvantage more strongly than median income. Although critics argue that correlation does not indicate causation, we note plausible causal mechanisms described in the epidemiological literature: inequality increases situational anxiety, stress, and social isolation, which in turn create measurable health and behavioral consequences.
The main pillar of our argument is breaking down the equity-efficiency tradeoff. Arthur Okun’s leaky bucket metaphor suggested redistribution inevitably wastes resources. Historical and national data, however, tell a different story. Periods of low inequality in the United States—especially since the New Deal through the postwar decades—have been marked by high productivity growth and strong innovation. OECD and IMF studies alike find that lower inequality is associated with stronger and longer-lasting growth.
We describe the ways in which equity can improve efficiency: stronger aggregate demand, greater social trust, broader human capital investment, and innovation spurred by higher wages. We also highlight empirical findings that tax cuts for the rich have little effect on growth but reliably increase inequality.
We reject the idea that markets automatically determine inequality, showing how legal and institutional structures shape distribution. Under Franklin D. Roosevelt, policies such as progressive taxation, strong labor protections, financial controls, and strong antitrust enforcement reduced inequality and coincided with increased productivity. After 1980, deregulation, weaker unions, higher tax rates, expanded intellectual property protections, and looser antitrust laws reversed these trends. The result was a steep rise in income shares and slow growth in productivity.
We also criticize economic activity for underestimating distributional concerns. The textbooks emphasize consumer surplus and GDP while ignoring evidence that relative inequality shapes well-being. This faculty position made policy changes that favored money over labor. Nordic societies offer a different model. With strong welfare states, high union density, and cultural norms that discourage status competition, these countries combine equality with high standards of living and strong social indicators.
We advocate for policies aimed at increasing skills and equal opportunity: universal health care, educational equity, strong labor protections, progressive taxation, financial regulation, strong antitrust enforcement, campaign finance reform, and changes in corporate governance and intellectual property law.
People come from interactive, equal environments. Ethical philosophy ensures equal respect. Epidemiology and social science show that inequality undermines well-being. Historical experience shows that public policy can reduce or increase inequality—and that greater equality should not sacrifice economic performance. Equality, we conclude, should serve as the North Star of public policy in developed societies.
