Guest Blogger Professor Erin Fuse Brown: The Health Implications of Piketty’s Inequality

Thomas Piketty’s book, Capital in the 21^st Century, is all the rage. His main claim is that in capitalistic systems, wealth (return on capital) generally grows faster than economic growth, such that capital wealth will dominate income earned from labor. The result is ever-increasing income inequality. Piketty claims the current rise of inequality and wealth concentration is a predictable result of our capitalistic system, leading us toward a system of “patrimonial capitalism” where the economy and society are controlled by those with inherited wealth rather than by the talented or meritorious.  There are many politically charged debates raging about Piketty’s data or conclusions, but there are also many implications for those of us who care about health.

In short, Piketty’s conclusions about rising inequality may bode ill for our health.  Bill Gardner at the Incidental Economist has explained that social inequality is bad for those at the bottom of the income scale, citing Sir Michael Marmot’s famous Whitehall studies demonstrating that lower social status is correlated with worse life expectancy and health outcomes. However, not only is economic or social inequality bad for those at the bottom, as it turns out, inequality may be bad for everyone’s health.

 

Ichiro Kawachi, Bruce Kennedy, and others have written about the phenomenon that higher levels of social inequality are harmful for the health of everyone in society. They have hypothesized that societies with more income inequality have weaker social fabrics, or “social capital,” to use their term. Societies with less social capital and higher social mistrust are characterized by higher levels of mortality and lower self-reported assessments of health across all income levels. Although the data on the relationship between inequality and health are somewhat mixed, there appears to be a larger public health concern that income inequality may have negative effects for everyone’s health, and it is worse the farther down the social scale you fall.

From a health policy perspective, what should we make of Piketty’s conclusion that we are approaching 19^th century levels of inequality? In Chapter 13 of Capital, Piketty predicts that we will not see another great expansion in the “social state”—the amount countries tax and spend on health, education, income replacement, and welfare—like many countries saw in the post-WWII era of economic growth. Thus, most of the policy debate will be devoted to the organization and administration of these services, how to save costs, improve quality or efficiency. Of course, the ACA itself is an example of a modern expansion in a time of economic slowdown, raising revenues and redistributing these in the form of health subsidies and expanded coverage. The different economic climates may help explain the bitter political divide on the ACA as compared with Medicare or Medicaid in the 1960s.

The bigger takeaway from a combined Piketty-Marmot-Kawachi perspective is that there is increasing evidence to support policies that address inequality directly (tax policy, education, or housing, for example) as part of the larger policy toward improving the nation’s health and reining in health care costs. Even if the U.S. becomes steadily richer, if the gains are increasingly concentrated at the top, we may see a sicker population in part because of the effects of inequality itself. An unequal society may result in a sicker population that is more expensive and less productive, so even for those who are not convinced that reducing inequality is an ends in itself, it may be a necessary means to rein in rising health care costs and to further economic growth. 

- Professor Erin Fuse Brown