Welcome to this insightful exploration of the critical relationship between equality and societal well-being. This blog has consistently highlighted that societies with significant income and wealth disparities tend to achieve poorer outcomes compared to their more equitable counterparts. Interestingly, even the affluent face a decline in quality of life in these unequal environments. They report lower happiness levels and negative scores on various social indicators, which include education, crime rates, and teenage pregnancies.
The contributors to this discussion argue that the human inclination toward fairness translates into a strong preference for equality. It’s worth noting that this tendency isn’t exclusive to humans:
In this straightforward context, fairness and equality are essentially synonymous. However, achieving fairness in complex societies—where significant differences in competence and access to resources exist—poses a considerable challenge. For instance, one can reflect on the criminal justice system. Consider the plight of a low-income individual facing a criminal charge. Would you expect that a public defender—with heavy caseloads and inadequate pay—could provide the same caliber of representation as a seasoned 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 at the Institute of New Economic Thinking website
The concept of equality extends beyond what economics textbooks or fashionable policies often suggest. Evidence across multiple disciplines increasingly associates more equal societies with improved well-being, enhanced social trust, and healthier democracies, disputing the notion that fairness must come at the expense of economic prosperity.
Our recent INET Working Paper posits that equality—especially equality of opportunity—should be the primary focus of public policy. Drawing insights from evolutionary biology, anthropology, moral philosophy, epidemiology, and economic history, we argue that humans are inherently wired for fairness and that societies characterized by high levels of inequality yield substantially lower well-being. We challenge the entrenched economic belief that equality compromises efficiency, revealing instead that more egalitarian societies often excel compared to their unequal counterparts.
We commence our analysis with the evolutionary basis for our arguments. Throughout most of human history, people lived in small, cooperative, and predominantly egalitarian groups. Evidence from hunter-gatherer societies indicates that these communities enforced sharing norms, punished free riders (not everyone was or is egalitarian), and resisted hierarchical structures. Evolutionary biologists and psychologists label this behavior as “strong reciprocity,” referring to the innate tendency to cooperate and penalize those who breach cooperative norms, even at a personal cost.
These findings are corroborated by experimental economics. In ultimatum and public goods games, individuals frequently forgo material benefits to penalize unfairness. Neuroscience research shows that equitable treatment activates the brain’s reward centers, while unfairness activates areas connected to disgust and anger. Even infants display an early preference for equal distribution.
Such scientific evidence directly challenges the limited view of human motivation rooted in Neoclassical economics, which assumes individuals are purely self-interested maximizers. We contend that crafting public policy grounded in our biologically determined moral psychology—particularly our aversion to inequality and exploitation—will gain democratic legitimacy and enhance social welfare.
Next, we place equality as a core tenet of modern moral philosophy. Although there is a divergence in philosophical thought surrounding the specifics of what should be equalized—welfare, resources, capabilities, or primary goods—most agree on the principle of equal moral worth. This includes notable thinkers such as John Rawls, Amartya Sen, Ronald Dworkin, and G. A. Cohen, all of whom prioritize equal respect and opportunity. Rawls’s difference principle, for example, allows for inequality only if it benefits the least advantaged. Sen’s capability approach shifts the focus from mere income to substantive freedom—the real opportunities people possess. Dworkin advocates for distributions that account for ambition while remaining indifferent to individual endowments, thus compensating for luck while honoring effort.
Even the utilitarian framework—historically a cornerstone of economics—harbors egalitarian underpinnings, as diminishing marginal utility suggests that redistribution can elevate overall welfare. However, modern economic discourse has largely sidelined these insights, favoring Pareto optimality and Kaldor-Hicks criteria, which obscure important distributional implications.
Proponents of policies emphasizing increased output or GDP per capita often invoke the fallacy of a tradeoff between equality and efficiency. Yet, no empirical evidence substantiates this claim; in fact, more equal societies generally enjoy equivalent or superior economic performance. Furthermore, some arguments rest on the flawed assumption that the fruits of production will automatically benefit the broader population, a notion that lacks robust empirical backing.
Others may suggest that distribution is inconsequential, yet this paper illustrates its substantial impact. Some arguments may even stem from an unyielding belief that altering income or wealth distribution within our existing capitalist framework is impossible, as such distributions seem dictated by immutable economic laws. Contrary to this perspective, we demonstrate that public policy has significantly influenced these distributions scrolling both ways. Finally, others might presuppose that future economic growth will distribute outputs more evenly, a notion that is highly optimistic given the recent trends.
Empirical evidence lends further credence to equality as a pivotal policy objective. The Easterlin Paradox reveals that in wealthier nations, increases in GDP per capita do not consistently elevate happiness levels. Notably, Easterlin highlighted that happiness levels in the United States have remained relatively flat since 1946, even amid rising GDP per capita. More alarmingly, studies in epidemiology have shown a robust correlation between income inequality and various social pathologies, including diminished trust, elevated homicide rates, poorer health outcomes, reduced social mobility, increased obesity and mental illness, and shorter life spans.
Across affluent nations and U.S. states, inequality appears to correlate with these adverse outcomes far more strongly than average income levels. Critics may argue that correlation doesn’t imply causation; however, plausible causal mechanisms outlined in epidemiological studies indicate that inequality fosters status anxiety, stress, and social fragmentation, which then manifest as measurable health and behavioral issues.
A fundamental aspect of our argument is the rectification of the equity-efficiency dichotomy. Arthur Okun’s “leaky bucket” metaphor suggested that redistribution inevitably squanders resources. However, historical and cross-national data present a different narrative. Times of reduced inequality in the United States—particularly from the New Deal through the postwar years—were characterized by impressive productivity growth and innovative breakthroughs. Research by organizations like the OECD and IMF further supports the idea that lower inequality correlates with stronger and more sustainable growth.
We detail mechanisms through which equality may enhance efficiency: stronger aggregate demand, heightened social trust, wider investment in human capital, and innovation spurred by increased wages. Additionally, we emphasize that tax cuts aimed at the wealthy exert minimal influence on growth while consistently exacerbating inequality.
Rejecting the notion that markets alone dictate inequality, we demonstrate how legal frameworks and institutional structures shape distribution. Under Franklin D. Roosevelt, progressive taxation, robust labor protections, financial regulations, and strong antitrust measures not only curtailed inequality but also coincided with remarkable productivity growth. Following 1980, a wave of deregulation, weakened labor unions, reduced top tax rates, enhanced intellectual property laws, and lax enforcement of antitrust regulations reversed these trends, leading to sharply rising income shares at the top and slower productivity growth.
We challenge the economics profession’s tendency to overlook distributional issues. Textbooks often emphasize consumer surplus and GDP while neglecting the influence of relative status and inequality on well-being. This intellectual stance has paved the way for policy changes favoring capital over labor. In contrast, Nordic countries exemplify a different model. Boasting strong welfare states, high union participation, and cultural norms that dissuade status competition, these nations successfully merge equality with high living standards and robust social indicators.
We advocate for policies that promote capabilities and equal opportunities: universal healthcare, equitable education, strengthened labor protections, progressive taxation, stringent financial regulation, robust antitrust measures, campaign finance reform, and modifications to corporate governance and intellectual property laws.
As a species, humans have evolved in cooperative, egalitarian surroundings. Moral philosophy underscores the principle of equal respect. Empirical evidence from epidemiology and social sciences illustrates that inequality undermines well-being. Historical precedents illustrate that public policy can exacerbate or mitigate inequality, thus asserting that economic performance need not be sacrificed for greater equality. We conclude that equality should serve as the guiding principle of public policy in advanced societies.
