Two studies have revealed new negative consequences of income inequality. One showed that people in unequal circumstances are more likely to engage in risky behavior, such as high stakes gambling, while the other pointed to an association between inequality and greater greenhouse gas emissions. It's not known if the same motivations that make people risk their savings make them willing to wager the future of the planet, but both studies make clear that a society that is too unbalanced in its distribution of wealth can hurt even those towards the top of the pile.
Income and wealth inequality are rising within most countries worldwide, often steeply Some negative effects have been known for a long time, including increased crime, and poorer health. There have also been attempts to make a link to additional environmental damage, since the very poor will destroy resources (for example cutting down forests) just to survive, while the very rich waste huge quantities on energy on multiple houses or private airplanes.
Until now, however, the links between these things have been poorly understood, and sometimes quite speculative. In the Proceedings of the National Academy of Sciences, the University of North Carolina's Professor Keith Payne explores one aspect of this connection.
Payne gave study participants money and options as to how to gamble it, ranging from low-risk choices that were likely to bring in small amounts of money, through to long shots with the potential for big gains. Those involved were more likely to back the high-risk option if they were led to believe that past players had ended up with a highly unequal spread of outcomes, some doing very well, others getting nothing, than if they were told everyone came out more or less the same. They were also more likely to express the “need” to win big to feel good about the outcome.
Additional studies confirmed the effect by providing varying information about the spread of outcomes during the course of the study, or asking participants what they wanted to know.
Such lab-based psychology tests are necessarily very artificial. Payne demonstrated the relevance to the real world by comparing Google searches for terms associated with financial risk with inequality in the American states where the searching was done. He concluded that where there are big gaps between rich and poor those near or below the middle feel more pressure to catch up with those at the top and search for riskier options in the hope of getting there.
This work helps explain a puzzle in past research. When measuring poverty objectively it is known that poor people are more risk averse, since they can't afford to lose anything they have. Yet people who are poorer than those around them are known to be more likely to be risk takers As the paper notes: “Perceptions of need may be influenced not only by material resources but also by subjective factors and relative comparisons and, therefore, by inequality.” Someone with a middling income considers it less adequate when surrounded by the very rich and very poor than when the rest of society is not too different from themselves.
Meanwhile, in another study published in Ecological Economics, Boston College's Professor Andrew Jorgenson compared each US state's income distribution and its carbon dioxide emissions over 15 years. He found that the GINI coefficient, the most widely used measure of income equality, showed no relationship to greenhouse gas emissions. On the other hand, the larger the share of the state's income concentrated in the hands of the top 10 percent, the more damage the state did to the climate.
Jorgenson and his co-author Juliet concluded there are actually two reasons for this association. "First, income concentration leads to concentrated political power and the ability to prevent regulations on carbon emissions," Schor said in a statement. "Second, high-income consumers are disproportionate carbon polluters."
This work suggests policies that redistribute wealth from the rich to the poor would save millions of tonnes of greenhouse gasses, even if not specifically targeted against polluting industries.