1) Relative income position has only weak to moderate effects on various well-being outcomes like health, mental health, and life satisfaction. These effects are further reduced when other factors like demographics, material conditions, and social stratification are considered. 2) Material conditions have a stronger influence on well-being than relative income position across most outcomes. Supporting the importance of absolute living standards over relative income position. 3) Reducing income inequality should not be the sole policy focus according to these results. Greatest improvements to well-being would come from reducing poverty and improving material living standards for all. Policy needs a broader perspective than just income inequality.

1. The Spirit Level Revisited
The impact of relative income
position for wellbeing
NERI Seminar Series, Dublin 15th March 2017
Dr Lisa Wilson
NERI, Belfast
lisa.wilson@nerinstitute.net

2. Politics of envy
Income inequality a necessary price to pay for economic growth.
‘Let our children grow tall, and let some grow taller than others’
(Thatcher, 1975)
‘Intensely relaxed about people getting filthy rich’
(Lord Mandelson, New Labour, 1998)
‘My concern is not to penalise the people who are successful and doing well
and earning a lot of money…’
(Tony Blair, New Labour, 2003)

3. Politics of concern
Income inequality has negative consequences socially, politically, &
economically.
‘Rising income inequality is the defining challenge of our times’
(President Obama, USA, 2016)
‘The gap between rich and poor does matter…And it doesn't just harm the poor, it harms all of us.’
(Ed Milliband, Labour)
‘as long as the problems of the poor are not radically resolved…by attacking the structural causes of
inequality, no solution will be found for the world’s problems’
(Pope Francis, 2016)
‘Inequality can no longer be treated as an afterthought. We need to focus the debate on how the benefits of
growth are distributed’
(Gurría, A., Secretary General, OECD, 2015)
‘Reducing excessive inequality is not just morally and politically correct, but it is good economics’
(Lagarde, C., IMF, 2015)

4. Impetus for concern with income inequality
• Income inequality rising inexorably across advanced economies -
particularly striking rise in UK and USA.
• Improved data.
• Global economic crisis.
• The Occupy movement & anti-austerity agenda.
• Wilkinson and Pickett’s The Spirit Level (2009) - high income
inequality produces serious negative societal outcomes.

5. The Spirit Level
‘the problems in rich countries are not
caused by the society not being rich
enough…What matters is where we stand
in relation to others’. (p.25)

6. Health and social problems as not related to
average income of rich countries

7. Rather….The amount of inequality
makes a difference

8. A thesis of correlations

9. How inequality gets under the skin
‘
Relative income an adequate proxy
of social position.
‘problems related to social status get
worse when social status differentials
get worse’
(Wilkinson & Pickett, 2009: 176)
Psychosocial mechanisms – increased
status anxiety and insecurity and a
greater ‘social evaluative threat’.

10. Critique of The Spirit Level
•Data concerns.
•Choice of social problems.
•GINI project - ‘Overall, the evidence that income
inequality plays the central role sometimes
proposed for it across a range of social outcomes is
relatively weak.’ (Nolan and Whelan, 2014: 168).

11. Research objectives
What is the manner in which Wilkinson and Pickett’s thesis plays
out within a country with high levels of income inequality?
What effect does relative income position have for
differences in individual well-being outcomes?
To what extent to these effects persist once we take into
account material conditions and other aspects of social
stratification?

12. Why well-being?
Measuring what matters
International and national concern:
e.g. Stiglitz Report; OECD Better Life initiative; European
Commission GDP & Beyond initiative; UK Measuring National
wellbeing initiative.
‘It's time we admitted that there's more to life than money, and it's
time we focused not just on GDP, but on GWB - general well-being’
(David Cameron, Prime Minister)

13. Data & Method
• UK Poverty and Social Exclusion study 2012.
• Follow up survey to UK Family Resources survey 2010-11.
• Funded by ESRC - a collaborative study between University of Bristol,
University of Glasgow, Herriott-Watt University, Open University, Queen’s
University Belfast, University of York, NATCEN, NISRA.
• Overall sample size 5,193 households & 12,097 individuals.
• Focus in this study on working-age adults (18-64): N = 6,695 individuals
(weighted n =7,187).
• Descriptive, bivariate, multivariate analytical techniques.

14. Measurement of relative income
- Income quintiles - divide and rank the population into five equally
sized income groups.
- Based upon weekly net equivalised household income after
housing costs.
- Implicit assumption that need to use a measure of relative income
which captures the objective position which people are in.
- However, some scholars argue that it is not the objective relative income
position that matters, but rather subjective perceptions regarding one’s
income position.

15. Measurement of Wellbeing
Measure Indicator
Health Self-rated health (single indicator)
Mental health GHQ12 (latent construct)
Social support Perceived social support (latent construct)
Wellbeing at work Job security (single indicator)
Civic engagement Civic participation (latent construct)
Subjective wellbeing Overall satisfaction with life (single indicator)

16. Overview of variables added in each model

17. Level of variance/change (Adjusted R²) in wellbeing
outcomes being explained by different factors
Relative
income
position
Relative income
including
sociodemographic
variables
Relative income,
Sociodemographic &
Material conditions
Relative income,
Sociodemographic
& Material
conditions and
other aspects
social position
Health 3.7% 10.4% 21.4% 32.7%
Mental Health 3.1% 6.2% 20.7% 22.3%
Social Support 2.6% 9.3% 17.3% 18.3%
Civic engagement 3.4% 5.5% 7.3% 12.8%
Wellbeing at
work
0.4% 1.7% 2.8% 4.8%
Subjective
wellbeing
6.0% 10.4% 27.6% 29.9%

18. Health

19. Mental Health

20. Social support

21. Civic
Engagement

22. Wellbeing at
Work

23. Subjective
wellbeing

24. Summary of key findings (i)
• Relative income position exerts only weak to moderate effects,
across each of the well-being outcomes examined.
• These effects are further weakened when a range of
sociodemographic characteristics, material conditions and other
dimensions of social stratification are taken into account.
• Material conditions exert stronger effects than relative income
position across five of the six dimension (exception is civic
engagement where effects of material conditions and relative
income position are similar).

25. Summary of key findings (ii)
• Together these results point to the central importance which
actual material resources have for well-being, over and above
relative position on the income hierarchy.
• Results indicate that concern with income inequality should not
lead to the neglect of the importance of absolute material
standards and the effects of deprivation and low-living standards
for outcomes.
• Support the arguments made by Townsend (1979) (and material
theorists more generally) regarding the negative effects of non-
ownership of items & non-participation in activities which are
customary in the society in which one lives.

26. Summary of key findings (iii)
• All in all, results do not support Wilkinson & Pickett’s conclusion
that we need a sole focus on reducing income inequality.
• Rather results indicate importance of directing attention towards
material resources which people have as a first priority.
• Treatment of relative income position as a proxy indicator of social
position ignores the sizeable independent effect which different
aspects of social stratification have across wellbeing outcomes &
so underestimates the effects of social position on wellbeing.

27. Policy implications & Conclusion
• Should not conclude from this however that high levels of income inequality do not require
policy intervention.
• However to reduce income inequality on the bases of the argued substantial effects it has in
terms of social evaluation anxieties is imprudent.
• Greatest improvements in wellbeing will be achieved by focus on reducing poverty and
improving material living standards.
• To do this need not only focus on poverty, or more growth but also on the overall distribution
and reducing the gap across the distribution in terms of material living standards.
• Moreover, still remain intrinsic, political and economic reasons for concern with high levels of
income inequality.
• Nevertheless, policy should not be solely concerned with income inequality – need for a
broader perspective on social stratification when devising policy.