Income inequality and health: In search of fundamental causes

Introduction Despite the long-held myth of equality and egalitarianism, Australia is a socially and economically divided society: it was from the early days of white settlement (Connell 1977), it has been since (Western 1983; Baxter et al. 1991), it still is today (Fincher and Nieuwenhuysen 1998), and all indications are that it will continue to be so in the future (Megalogenis 2000). In fact, the socio-economic divisions within this country are predicted to widen (Kelly 2000; Steketee and Haslem 2000). Income inequality is a key indicator of this divide. Between 1982 and 1993/94, earnings and private income inequality increased in Australia, and while most of this increase was offset by government-initiated changes to the taxation and welfare systems (Harding 1997), Australia still has marked inequities in its distribution of income. One perspective on the extent of income inequality in Australia is illustrated in figure 6.1. These data indicate the share of total weekly income received by the poorest and richest 20% of families between 1994 and 1998. For each period, families in the bottom quintile of the income distribution received less than 4% of the total income going to Australian families, whereas those in the top quintile received just under 50%. This represents more than a 12-fold difference in share of the nation’s income. The extent of Australia’s income inequality has also been made apparent in recent international assessments that have shown that Australia is not far behind ‘high’ inequality countries such as the United States and Britain in terms of its level of income disparity (Smeeding and Gottschalk 1999). The movement towards a more divided society is of concern, not only because of its inherent injustices and offence to moral sensibility, but also in light of studies showing that income inequality is bad for health. Since the mid-1980s, a growing body of epidemiological and public health research has demonstrated that morbidity and mortality risk is greatest in areas with high levels of income inequality. At present, our knowledge and understanding of how income distribution affects health is limited, although a number of explanations have been proposed. These include differential investment in human, physical and social infrastructure; psychosocial processes related to perceptions of one’s position in the socio-economic hierarchy; and social cohesion.