Consequences: The Price of Inequality
Inequalities, even if they are rising, are not an issue for economists as long as they are considered the outcome of market processes. However, the recent debate on rising inequalities has invoked new interests in the detrimental effects of economic inequalities for society and for the economy itself. Detrimental aggregate effects of economic inequality have been discussed before with respect to public health or political participation. Wilkinson and Pickett (2010) have reviewed broad evidence that supports the general claim of the detrimental effects of large inequalities on public health above and beyond the negative individual effects for those at the lower part of the distribution. Their main argument is that large inequalities produce higher levels of status competition that transform into stress, distrust and political apathy. Similar debates exist with respect to social trust, happiness and political participation. Recently, inequality has been found to be detrimental for economic growth (Stiglitz 2012). With empirical evidence that inequality is not only bad for those at the bottom of the distribution, but also detrimental for all, or at least the majority in the middle, a powerful argument for public debates on inequality has been made.