Chapter 4
The Psychological Impact: How Inequality Gets Under the Skin
Our sensitivity to social position profoundly affects our wellbeing in ways that reach deep into our psychological makeup. Extensive research reveals a continuous upward trend in anxiety levels in the US between 1952 and 1993, with particularly sharp increases during periods of growing economic inequality. By the late 1980s, the average American child was experiencing anxiety levels higher than child psychiatric patients in the 1950s - a startling indication of how social pressures have intensified. Alongside rising anxiety came what initially appeared to be increasing self-esteem. However, researchers discovered this wasn't genuine self-confidence but rather a defensive, insecure egotism-a "threatened egotism" or "narcissism" that manifests as a protective shield against social judgment.
Why does inequality create such psychological distress? Research shows that social evaluative threats-situations where we might lose esteem in others' eyes-produce the strongest physiological stress responses, even stronger than physical dangers. These occur when we face potential negative judgment, especially combined with unavoidable failure. Laboratory studies demonstrate that merely anticipating evaluation triggers cortisol release and cardiovascular strain. As inequality increases, we focus more on assessing each other's rank rather than accepting our common humanity. We constantly read the "indication of rank" in each other's eyes, making snap judgments within seconds of meeting - through clothing choices, speech patterns, posture, and countless other subtle signals.
The contrast between equal Japan and unequal America reveals stark differences in self-presentation and social behavior. Japanese people typically adopt self-deprecating, self-critical styles, attributing successes to luck and failures to personal shortcomings - a cultural pattern that promotes group harmony. Americans do the opposite, claiming successes as personal achievements while blaming failures on external factors, reflecting an individualistic response to status pressure. This difference manifests in everything from job interviews to classroom behavior, where Japanese students are more likely to ask questions when confused, while American students often remain silent to avoid appearing unintelligent.
Rising inequality intensifies these social evaluation anxieties by making status differences more consequential for life outcomes. Greater inequality heightens status competition and anxiety, leading people in more unequal countries to prioritize financial prospects and ambition over romantic considerations when choosing partners. Studies show that in more unequal societies, marriage patterns increasingly sort people by income and education levels, reducing social mobility across generations. The French Revolution's demand for "liberty, equality and fraternity" identified the key dimensions for creating a better society. Equality serves as the precondition for achieving both liberty and fraternity, as large inequalities generate divisive class prejudices, weaken community life, reduce trust, and increase violence. Research across multiple countries demonstrates that more unequal societies have higher rates of mental illness, drug abuse, and social isolation - clear evidence that inequality gets under the skin at both individual and societal levels.
Chapter 5
Fractured Communities: How Inequality Erodes Social Bonds
When Alexis de Tocqueville visited America in 1831, he was struck by the "equality of conditions" he observed among white Americans. He noted how Americans "constantly unite together," interact openly with strangers, and readily support each other in times of trouble. This equality fostered a sense of trust among citizens that de Tocqueville believed was fundamental to American society.
Today's data shows that inequality corrodes trust between people. In more equal societies like Sweden, 66% of people believe others can be trusted, compared to just 10% in more unequal Portugal. Similarly, within the United States, trust levels range from 67% in North Dakota to just 17% in Mississippi. As inequality has risen in America since the 1960s, trust has steadily declined.
This matters because trust leads to cooperation, better community life, improved health outcomes, and even survival during crises. During Chicago's 1995 heatwave, poor neighborhoods with high trust had lower death rates than equally poor areas with low trust, where residents were too frightened to open windows or check on neighbors.
The rising popularity of SUVs with aggressive names like Outlander, Pathfinder, and Raider reflects this growing mistrust. These vehicles project an image of military ruggedness rather than speed or sleekness, symbolizing American attitudes toward crime, violence, and rugged individualism. As inequality rose in the 1970s, practices like hitchhiking declined while gated communities and home security systems increased.
Just as trust and social relations are affected by inequality, so too is the status of women. Research shows women's status (measured by political participation, employment, earnings, and education) is significantly worse in more unequal US states. The same pattern appears internationally. More equal countries are also more generous to poorer nations, with only Norway, Sweden, Denmark, and the Netherlands meeting the UN's target for foreign development aid.
Chapter 6
The Mental Health Crisis: Anxiety, Depression, and Substance Abuse
Mental health problems have become alarmingly prevalent in unequal societies like Britain and America. Headlines warn of "THE DISTURBED GENERATION" as an estimated one million British children suffer from mental illness. In any secondary school of 1,000 students, approximately 50 are severely depressed, 100 distressed, and 10-20 suffering from obsessive-compulsive disorder.
The situation for adults is equally troubling. In the UK, 23% of adults suffer from neurotic disorders, psychotic disorders, or substance addiction, with doctors writing 29 million prescriptions for anti-depressants in England alone in 2005. The situation in America is even worse-one in four adults experience mental illness annually, with almost a quarter of these cases classified as severe.
There's a remarkably strong relationship between income inequality and mental illness rates across wealthy nations. The proportion of adults suffering from mental illness varies more than threefold between equal and unequal countries. In more equal Germany, Italy, Japan, and Spain, fewer than 1 in 10 people had been mentally ill; in Australia, Canada, New Zealand, and the UK, more than 1 in 5; and in the highly unequal USA, more than 1 in 4.
Why do more people suffer mental health problems in unequal societies? The 'affluenza virus'-a set of values emphasizing money, possessions, appearance, and fame-increases vulnerability to emotional distress. As inequality grows, the super-rich spend more on luxury goods, creating a cascade of competitive consumption down the income scale. We become "condemned to consider the successful with bitterness and ourselves with shame." This creates "status anxiety" and an "addiction to income" that damages family life and relationships.
Illegal drug use is also significantly more common in more unequal societies. Data shows a strong correlation between inequality and combined use of opiates, cocaine, cannabis, ecstasy, and amphetamines across countries. In a revealing experiment with macaque monkeys, researchers found that subordinate monkeys took much more cocaine than dominant ones-essentially medicating themselves against the impact of their low social status.
Chapter 7
The Physical Toll: Health Consequences of Inequality
The Whitehall studies of British civil servants revealed a striking social gradient in health. Those in the lowest grades had death rates three times higher than administrators in the highest grades. This gradient runs through the entire hierarchy, with each step down corresponding to worse health outcomes. While lifestyle factors like smoking and obesity explained some differences, they accounted for only one-third of the increased heart disease risk.
Comparing two babies-one born in America with its enormous healthcare spending and high-tech medical resources, and another in Greece with half the income and healthcare spending-reveals a counterintuitive truth: the Greek baby has a 1.2-year longer life expectancy and 40% lower risk of infant mortality. Even more dramatic contrasts exist: American babies are twice as likely to die in their first year as Japanese babies, and black men in Harlem were less likely to reach age 65 than men in Bangladesh.
The "big idea" is that what determines health in a society isn't its overall wealth but how evenly that wealth is distributed. Numerous studies comparing countries and American states show that more egalitarian societies tend to be healthier. The health disparities within populations are even more dramatic than between countries-in the UK, the life expectancy gap between highest and lowest social classes is about 7 years, while some US studies report gaps of up to 28 years between rich and poor areas.
The ancient belief that mind affects body has been validated by modern research showing how stress impacts physical health. When we experience acute stress, our bodies trigger the fight-or-flight response. This response is protective when brief, but chronic stress keeps our bodies in a constant state of high alert, causing damage. Chronic mobilization of glucose leads to central obesity and diabetes; persistent blood vessel constriction causes hypertension and heart disease; and while momentary stress enhances immunity, chronic stress suppresses it.
Research confirms that inequality affects health even after adjusting for individual incomes, with dramatic health improvements following periods of greater equality in Britain and Japan, while Russia experienced decreased life expectancy amid rising inequality. The biology of chronic stress explains why unequal societies are almost always unhealthy societies.
Chapter 8
Expanding Waistlines: Inequality and the Obesity Epidemic
Obesity is rapidly increasing throughout the developed world, with rates doubling in just a few years in some countries. In the USA, obesity has risen from 15% in the late 1970s to nearly a third of the population today, while in the UK it's grown from under 10% to more than a fifth. This health crisis increases risks of hypertension, diabetes, cardiovascular disease, and certain cancers.
Countries with smaller income differences have significantly lower obesity rates. The contrast is striking-in the USA over 30% of adults are obese, twelve times higher than Japan's 2.4%. Similar patterns exist for children, with the Netherlands having just 7.6% of children overweight compared to 25.1% in the USA. Within the United States, obesity ranges from 21.5% in Colorado to 34% in Texas, with rates consistently higher in more unequal states.
People in more unequal societies eat more and exercise less, but diet and activity levels don't fully explain class differences in obesity. Chronic stress changes how bodies respond to food, depositing fat particularly around the abdomen rather than hips and thighs. Stress affects cortisol production, which increases vulnerability to weight gain in the most dangerous areas. Stress also drives "comfort eating"-when chronically stressed, people tend to consume more sugar, fat, and alcohol.
The relationship between income inequality and obesity is consistently stronger for women than men. Studies show obese women face more discrimination in employment and marriage markets than obese men. Female obesity in adolescence links to lower adult earnings, with HR professionals admitting bias against overweight candidates.
Social class differences in body image aspirations contribute to obesity gradients. Higher-class women are more likely to monitor weight and diet, while those moving down the social scale place less emphasis on thinness. In some communities, thinness signals poverty or illness-"in the ghetto, you just can't afford to look too thin."
The "thrifty phenotype" hypothesis suggests maternal stress during pregnancy modifies fetal development, preparing babies for a stressful environment. These babies have lower birthweight and metabolic rates-adaptations beneficial in food scarcity but maladaptive in modern abundance. In unequal societies with higher stress levels, this phenomenon may contribute significantly to obesity prevalence.
Chapter 9
Learning Gaps: Educational Performance and Inequality
International educational scores correlate strongly with income inequality-more unequal countries and states demonstrate worse educational attainment. Data shows that both math and literacy scores are significantly lower in more unequal countries and US states. Additionally, high school dropout rates are much higher in unequal US states, with some having over 25% of students dropping out compared to only 12% in the most equal states.
Raising national educational standards appears to depend on reducing the social gradient in educational achievement. Professor Douglas Willms demonstrated that countries with steeper social gradients (where parental education more strongly determines children's outcomes) have lower average literacy scores. In more equal societies like Finland and Belgium, children from less educated families perform much better than their counterparts in unequal countries like the US and UK.
Nations with stronger welfare provisions tend to have both higher reading scores and lower social inequalities in literacy. Income inequality affects educational outcomes through its impact on family life and early childhood development. By age three, children from disadvantaged backgrounds are already up to a year behind more privileged peers educationally. More equal societies provide better support systems, including longer paid maternity leave, family allowances, and high-quality early childhood education programs.
Inequality directly affects cognitive abilities through "stereotype threat." In a striking experiment with Indian schoolboys, low-caste boys performed equally well as high-caste when caste was unknown, but their performance dropped significantly after their caste was publicly announced. Similarly, Jane Elliott's famous 1968 classroom experiment showed how quickly artificial hierarchies based on eye color affected children's performance. When told blue-eyed children were superior, they immediately outperformed brown-eyed children; when told the opposite days later, the situation reversed completely.
Inequality affects educational achievement through its impact on aspirations and values among those lower in the social hierarchy. Working-class families often value "knowing how to have a good laugh" over abstract discussions that seem "posh and pretentious." Children face minimal rules at home about homework or learning: "If they want to learn, they will, if they don't, they won't." Paradoxically, children in more unequal countries report higher aspirations despite lower actual achievement, creating a gap between dreams and reality.
Chapter 10
Building a Better Future: The Path to Greater Equality
Creating a more equal society requires not a revolution but a transformation-a continuous stream of small changes moving in a consistent direction. This transformation means creating a more sociable society while avoiding disruption that increases insecurity. The goal is to make everyone feel that a more equal society offers a more fulfilling life than one dominated by hierarchy.
There are multiple paths to achieving greater equality. Some countries like Japan achieve low inequality through smaller differences in gross earnings before taxes and benefits, while others rely more on redistributive taxes and welfare systems. Despite being at opposite extremes of inequality, both the USA and Japan have similarly low proportions of GDP devoted to government social expenditure. What matters is the level of inequality you finish with, not how you get there.
To address inequality, we need democratic employee-ownership that gives workers control over their work and its earnings. This transforms businesses from property into communities where management answers to employees rather than distant shareholders. Companies could raise capital through loans while retaining control, avoiding the drain of dividends to external shareholders.
Employee-ownership offers many advantages: it enables social emancipation as people become team members; puts income differentials under democratic control; redistributes wealth from external shareholders to employees; improves productivity; rebuilds community experience at work; and likely improves wider sociability. Employee-owned companies have impressive track records, including the London Symphony Orchestra, John Lewis Partnership, Publix Supermarkets, and Spain's Mondragon Corporation.
The modern economy is experiencing a profound shift as technological change rapidly reduces variable costs, especially for digital products. For digital goods-music, software, films, books-additional copies cost almost nothing to produce or distribute, creating a growing "free" sector despite corporate efforts to enforce patents and copyright protection. This technological trend extends beyond digital products to nanotechnology, biotechnology, and genetic engineering.
Creating a more equal society requires developing political will based on an achievable, inspiring vision. We need fundamental changes to democratically control income differences and root equality more deeply in society. The evidence shows that even small decreases in inequality significantly improve quality of life. We can create a better society where people are less divided by status and hierarchy, regain community, overcome global warming, control work democratically, and share in a growing non-monetized economy. This isn't utopian-some rich market democracies already demonstrate these possibilities.
