Inequality Kills

by Russ Roberts on May 12, 2006

in Inequality

Global warming is routinely blamed for anything that goes wrong in the natural world. It turns out that inequality is the cause of everything bad that happens in the human world. Take this story from Reuters on the rising suicide rate in Japan. Here’s the opening line:

The number of suicides in Japan is likely
to have exceeded 30,000 for the eighth straight year in 2005,
and analysts say a widening income gap is partly to blame for
the nation’s stubbornly high suicide rate.

Usually, a widening in something that causes something else would lead to a worsening of that phenomenon rather than leaving it "stubbornly high." So this is a bit strange. Then there’s the classic, "analysts say." I wonder how many. I wonder what the justification is for saying it. Let’s see:

Suicides rose in 1998 amid an economic slump and the number
of those who take their lives has exceeded 30,000 every year
since then.

"The bulk of the increase since 1998 is suicides by men who
are middle-aged or older and have either been laid off or whose
businesses have failed," said Masahiro Yamada, a professor at
Tokyo Gakugei University.

Hmm. I thought it was the widening income gap that was the cause of the higher suicide rates. But here the cause seems to be bad economic times. They are not the same thing.

In 2004, there were 32,325 suicides in Japan, or 25.3 per
100,000 people, according to government data. Males accounted
for over two-thirds of the total and health problems were the
most common reason, followed by economic problems.

OK. Health problems and economic problems. Makes sense. (Sort of. How do you generalize in a reliable way about the reason for suicide? Where would the data come from?) But where is the role of the widening economic gap? Where are the analysts saying so?

Yamada, who has written that an income gap in Japan has
widened recently following the breakdown of a traditional
social safety net such as lifetime employment, said a rising
risk of dropping out of the middle class was behind the high
suicide rate.

So where does that conclusion come from? "Economic problems" and failed businesses are not the same as worrying about dropping out of the middle class. Sounds like more of a wild guess on the part of Professor Yamada rather than an analysis.

Note to Reuters: The letter "s" on the end of the word "analysts" implies there is more than one.

(HT: Peter St. Onge)

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  • Alex

    There are several studies of late which have come to the conclusion that greater income inequality and rigidity in socioeconomic hierarchies leads to worse health outcomes for middle and low income people. The Journal of the American Medical Association released such a study recently. So, that could explain part of the health outcomes.

    Also, bad economic outcomes surely have some correlation with widening gaps. After all, getting laid off in Japan is a new thing, associated with growing acceptance of income inequality. The same goes with temp work vs. full-time. As for failed businesses, lets also remember that the Japanese government has maintained tax breaks for small businesses, and these are going down.


    Another problem is this. The Japanese economy has been growing for the past few years, yet the suicide rate is still going up. You would think that the number of people citing economic difficulties for suicides would go down on average... not go up, unless some people are getting really unlucky. As such, the suicide rate going up along with economic growth is perfectly reasonable if one assumes that income inequality is widening and class lines are hardening, making it easier for people who were middle class to fall out.


    Nice post, even if you try to refute the irrefutable.






  • Alex

    People being stressed out by inequality is due to psychology, not economics. Humans are a sociable species, and when people around us are doing so much better, we feel worse. Just think about this example; imagine you get a C on an exam, but the class median was a B. Then that means that half the people in the class got a letter grade higher than you did. Wouldn't your feeling badly about the test not only have to do with your own grade, but what other people got around you? Also, think about exam curves. When those are in play, someone else doing better does increase the chances of you doing worse.

  • Who made these studies, psychologists, psychiatrists? People get sick because Bill Gates's income is growing faster than theirs? I'd like to meet these people. If their income is not growing at all, then how do we know it's increasing inequality that accounts for declining health? Maybe it's stress from stagnation having nothing to do with the person's relative position. I'd be skeptical of such studies.

  • Alex

    People are effected by their relative position in the social hierarchy. Those near the bottom have much more stress, and this of course leads to them having weaker immune systems, and more susceptible to illnesses.

    Also, remember that the price of valuable goods goes up as well as people compete for scarce resources, and this increases stress too. Good health care, colleges, and houses don't come cheap, and when wealthy get wealthier, thye bid up the prices for these goods across the board, thereby increasing the stress for people below them. I am saying that if the incomes of the wealthy go up, that they will bid up the price of things and I will end up worse off? Yes, I am.


    You can be skeptical of this stuff if you want, but the evidence speaks for itself.

  • JAMA: Because MDs know so much about economics!

  • "Those near the bottom have much more stress, and this of course leads to them having weaker immune systems, and more susceptible to illnesses."


    I hardly understand how the fault of the stress lies on the shoulders of the wealthy; is it not the fault of the less wealthy for having envious tendencies in the first place?


    It's akin to a obese person blaming their health anxieties and stress on the sucessfully, skinny people who dare to exist when their are fat people around them who are offended by it.

  • All good stuff, thanks. ;-)


    The "widening income gap" hand-wringing always bugs me too.

  • Alex

    The fault of the stress does not lie on the wealthy; the stress is a by product of the gap. Now, lets take an extreme example. If you were a slave and you had a master, would you not feel that there was a disparity between you have more than just economics? Well, the same is the case when class lines calcify, albeit less extreme. Also, the fact that our culture heeps praise on those who are financially successful, and denounces those who are not as indolent, insolent, etc., probably doesn't help the stress of people who are middle class and are stagnating.

  • Noah Yetter

    "Income inequality" cannot cause anything, because it is not a real thing. It is a statistical abstract constructed from billions of individual transactions. Moreover it does not have a single definition, but rather can and has been defined a hundred different ways.


    You could argue that real events which are leading to an increase in some measure(s) of income inequality are also leading to an increase in suicides (or anything else). You could also argue that an increase in people's perception of income inequality is the causal factor. But you cannot argue that the increase in a measure of income inequality is causing anything.

  • Alex

    Looks like I need to give another example. If you were living in the 1950's and were in the 60th percentile in terms of income, wealth, etc., and there was a time machine which could take you to 2006 and put you in the 30th percentile in terms of income, wealth,etc., would you take the deal? You would be absolutely better off at the 30th percentile in 2006 vs. 60th percentile in the 1950's, but relatively speaking you would be worse off.

  • metis314

    Alex, hell yes I'd take that deal in a hearbeat. I don't care at all what my neighbors have, let alone what some stranger has who lives in another region of the US... but then again, I'm a lowly grad student.

  • LJK

    I was a recreation theory major in school. Nearly every class had something to say on the suicide rate in Japan. Due to the stresses of overwork, where workers stay very long hours, sleep in tubes, and don’t have time for leisure for days or weeks at a time, many people kill themselves. This happens so often they have a word for it, karoshi.


    Japan’s suicide rate may correlate to the economy, although I’d be willing to bet this is the case in every country, but karoshi is usually counted as a health related issue (stress) and thus doesn’t show up a lot on statistics.


  • Alex:


    Are you arguing that it's income percentile that matters, as opposed to income inequality? Is it your contention that the effect of a lengthening of the upper tail of the income distribution is the same as that of moving down in income rank?

  • Alex

    Well then, metis314, you are one of the exceptions, if Keeping up with the Joneses is still in force (which it is).

  • Mcwop

    Alex, The U.S. has a large "income gap" when compared to other industrialized countries, yet we have one of the lower suicide rates:


    http://www.who.int/mental_health/prevention/suicide/suiciderates/en/


    Normally, I would not make such a wild connection, but at least I provided more than a made up example.


  • John Dewey

    Alex:

    "There are several studies of late ..."


    "You can be skeptical of this stuff if you want, but the evidence speaks for itself."


    Can you provide the evidence we should not ignore? or at least a link to such evidence? That's not too much to ask, is it? I'm an open-minded guy, and I'll look at whatever you provide. But please don't give another hypothetical example. Those aren't really helping your argument.


    Quite frankly, I cannot imagine why anyone living in the 50's would reject today's higher living standards and greater life expectancies. So what if I'm not the top dog? I've still got microwave ovens, big screen TV's with 80 channels, a three-bathroom house, and a golf club that provides 250 yard drives into the middle of the fairway. And I haven't worn a tie to work in a decade. We're living in paradise! Who other than anal-retentives gives a damn about income inequality?

  • WMCW

    I think Noah Yetter is right. I wonder why people tend to make causal explanations of this kind.

    I consider inequality is not a bad fact itself. I do not feel woried about it existence or inexistence. I think that someone who is fearful of inequality then he is not libertarian. And if she-he is fearful of not having inequality then he is not not a libertarian either. For discussion, a conservative person may be the first case, and a miserable soul the second.





  • Alex,


    Regardless if there is blame to be pinned here or not; the ultimate cause of that so-called problem could only be laid at the doorstep of government, for


    A) Forcefully collecting income information and publishing it


    B) distorting the economy to the extent that wealth is being 'unfairly' distributed towards firms rewarded by reduced competition (the firms least hurt by regulation compliance costs), or other forms of monopolizing industry (i.e. "intellectual property", no-bid contracting, etc.)


    Also, the entire concept of "income distribution" is a little screwy, because there ain't no fixed-pie to be distributed.

  • Mark

    The studies Alex mentions are only suggestive: we are a long way from "proof" that inequality leads to worse health outcomes among the less well-off. We don't get to conduct experiments in which we can arbitrarily change someone's relative social standing and watch what happens to the person's health.

    In any case, what should matter is not one's relative position in society, but one's perception of relative position. According to McCloskey, something like 90% of Americans self-identify as middle-class (a similar percentage think they are better than average drivers). Moreover, Americans have a strong social norm against discussing how much money they make so income inequality can not be what is causing stress. If anything, what should be more relevant is inequality in consumption which, naturally, is much less skewed.

  • John Dewey

    Here's a link to evidence that "speaks for itself" and contradicts the first sentence in the first comment above. The conclusion from this 2002 British Medical Journal article:


    "Evidence favouring a negative correlation between income inequality and life expectancy has disappeared"


    http://tinyurl.com/hce87


  • Jim Collins

    It's true that Japan's suicide rate has gone up every year from 1994 to 2000. But to quote only that statistic and then draw the conclusion 'It has to do with economic problems' is disingenuous. In 1985, at the height of its bubble economy, Japan had the same suicide rate among males (26.0 per 100,000) as it had in 1997, which happened to be one of the low points in the recent Japanese economy. After 1998 the suicide rate among males shot up to 36.5 per 100,000. This may or may not have had anything to do with the anemic economic growth. Historically, Japan has had a high suicide rate compared to other countries, excepting, of course, the dismal Slavic countries and ex-Soviet Union satellites.Here are the statistics. Sorry the page is in Japanese.


    http://www.math.tohoku.ac.jp/~kuroki/Readings/jstat.html

  • John Pertz

    Not to be rude Alex, but I do not believe that your defense of the income inequality hypothesis is worth much. Just looking at the situation as an outsider I would argue that widening income inequality is hard to peg as an excuse for the suicide because of the perception problem. In fact in the short run and medium run it is almost impossible to perceive in a tangible sense except for instances when you are comparing social classes from the extreme ends. I would be reluctant to be persuaded by an analysis that aruges that people are deciding to kill themselves due to reading macro statsistics, which is the only way you can notice a widening income gap. That line of thinking sort of dehumanizes and erodes the personal nature of suicide. In short Alex your analysis seems inherintly ideologicaly self serving. Suicide is a very serious topic and as a result it demands serious investigation into it causes. Knee jerk poltitical excuses are a slap in the face to the true underliying problems that are ultimately responsible for people's decisions to take their lives.

  • John Pertz

    If income inequality leads to suicide then why in gods name does the egalitarian utopia that is Sweden have twice the suicide rate as the U.S?

  • John Reed

    Alex said:

    "[Am I] saying that if the incomes of the wealthy go up, that they will bid up the price of things and I will end up worse off? Yes, I am."


    On the contrary, the increasingly wealthy are less likely to bid up the price of 18" TVs than they are to splurge on a 52" Plasma HDTV. And while it is true that resources are limited, it is not clear that the manufacture of very expensive plasma TVs is the proximate cause of any change in the price of 18" TVs due to strained resources. The more typical scenario of new and relatively expensive products is that the purchases by the wealthy tend to expand the market and drive down the price for those particular products. And to the extent that these products increasingly compete with the 18" TVs (as their price comes down), there is pressure on the manufacturers of 18" TVs to lower their prices; not increase them.

  • John Dewey

    Alex: "[Am I] saying that if the incomes of the wealthy go up, that they will bid up the price of things and I will end up worse off? Yes, I am."


    John Reed: "On the contrary, the increasingly wealthy are less likely to bid up the price of 18" TVs than they are to splurge on a 52" Plasma HDTV."


    "there is pressure on the manufacturers of 18" TVs to lower their prices; not increase them. "


    While I agree with John Reed's response, I feel it is incomplete.


    Alex, the idea that consumer goods are "bid up" in price is not totally supported by the evidence. Mr. Reed's example of 52 inch Plasma TV's is a good example. Prices of such sets have actually dropped as high profits attracted more producers:


    2001 $20,000

    2002 $11,000


    2003 $5,000


    2006 $3,200


    It is true that high income buyers will bid up the prices of goods having a small, finite supply. Examples include antiques, real estate in San Francisco, and fine art. But many goods that can still be manufactured do not necessarily rise in price when demand increases.


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