Tag: health inequalities

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Launch of a major study of inequality

The IFS has launched a major five-year review into all aspects of inequality. The review is led by Sir Angus Deaton, the Scottish-born Professor of Economics and International Affairs at Princeton University. In 2015, he was awarded the Nobel Prize in Economic Sciences for his analysis of consumption, poverty, and welfare. The review will cover all aspects of inequality, including inequality of income, wealth, health, life-span, education, social mobility, housing, opportunity and political access, and by gender, age, ethnicity, family and geography. It will look at trends in and causes of inequality, the impacts of globalisation and political change, barriers to tackling inequality and poverty, and at various policy measures.

Although the published Gini coefficient in England and Wales has not changed much over the past 15 years, largely because of support given to the poor by tax credits, it did rise from 31.7 to 33.2 from 2015/16 to 2017/18 (the latest year for which figures are available). Other measures of inequality, however, have changed more dramatically. There is huge geographical inequality in income in the UK, reflected in inequality in health. Average weekly earnings in London are 66% higher than in the north east of England. And, according to the IFS, ‘Men in the most affluent areas can expect to live nearly 10 years longer than those in the most deprived areas, and this gap is widening’.

The UK has the greatest inequality of income of developed countries, with the exception of the USA. The IFS warns that the UK could follow the USA:

…where wages for non-college-educated men have not risen for five decades, and where rising mortality for less-educated white men and women in middle age has caused average life expectancy in America to fall for the last three years – something that has not happened for a century. We have not experienced anything similar in the UK but we have now had a decade of stagnant wages and there is recent evidence that ‘deaths of despair’ – deaths from suicide and drug and alcohol abuse – are now rising among middle-aged Britons. Sir Angus will go on to say:
 
‘I think that people getting rich is a good thing, especially when it brings prosperity to others. But the other kind of getting rich, “taking” rather than “making”, rent-seeking rather than creating, enriching the few at the expense of the many, taking the free out of free markets, is making a mockery of democracy. In that world, inequality and misery are intimate companions.’

The initial report, which introduces the IFS Deaton Review, points to some possible causes of growing inequality, including the dramatic decline in union membership, which now stands at just 13% of private-sector employees, with more flexible labour markets with growing numbers of workers on temporary or zero-hour contracts. Other causes include growing globalisation, rapid technological change making some skills redundant, the power of large companies and their shareholders, large pay rises given to senior executives, growing inequality of access to education and changing family environments with more single parents.

About one in six children in the UK are born to single parents – a phenomenon that is heavily concentrated in low-income and low-educated families, and is significantly less prevalent in continental Europe.

Then there is the huge growth in housing inequality as house prices and rents have risen faster than incomes. Home ownership has increasingly become beyond the reach of many young people, while many older people live in relative housing wealth. Generational inequality is another major factor that the Deaton Review will consider.

Inequalities in different dimensions – income, work, mental and physical health, families and relationships – are likely to reinforce one another. They may result in, and stem from, other inequalities in wealth, cultural capital, social networks and political voice. Inequality cannot be reduced to any one dimension: it is the culmination of myriad forms of privilege and disadvantage.

The review will consider policy alternatives to tackle the various aspects of inequality, from changes to the tax and benefit system, to legislation on corporate behaviour, to investment in various structural resources, such as health and education. As the summary to the initial report states:

The Deaton Review will identify policy responses to the inequalities we face today. It will assess the relative merits of available policy options – taxes and benefits, labour market policies, education, competition policy, ownership structures and regulations – and consider how policies in different spheres can be designed to complement each other and minimise adverse effects. We aim not just to further our understanding of inequalities in the twenty-first century, but to equip policymakers with the knowledge and tools to tackle those inequalities.

Articles

IFS Deaton Review

Questions

  1. Identify different aspects of inequality. Choose two or three aspects and examine how they are related.
  2. Why has inequality widened in most developed countries over the past 20 years?
  3. What is meant by ‘rent seeking’? Why may it be seen as undesirable? Can it be justified and, if so, on what grounds?
  4. What policies could be adopted to tackle poverty?
  5. What trade-offs might there be between greater equality and faster economic growth?
  6. What policies could be adopted that would both reduce inequality and boost long-term economic growth?
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Life expectancy, how much information is too much information?

Life expectancy is increasing across the world and the latest set of figures from the Office for National Statistics show that in the UK it has passed 79 for boys born in 2010–12, and 82 for girls born then. In fact the prediction is that over a third of babies born in 2013 will live to more than 100. The data throws up some interesting questions. How well prepared are we for lives that last this long? And how evenly distributed is this increase in life expectancy? Pensions’ minister, Steve Webb, has called for better information on life expectancy to be shared. How would this impact on our decision making?

It seems reasonable to think that increasing life expectancy must be good news. And of course, for individuals it can be. In 1951 the average man retiring at 65, in England and Wales, could expect to live and draw a pension for another 12.1 years. By 2014 this had risen to 22 years.

But while we can look forward to longer life, for the government, it presents some challenges The first is that we just don’t save enough for our old age. This seems to be partly because we find it hard to make decisions that will have an impact so far in the future. There are a number of measures that have been put in place to encourage us to save more, including auto-enrolment into company pension schemes. This is being rolled out across businesses over the next three years. In the 2014 Budget, the Chancellor announced that people reaching retirement age will be able to draw all their pension as a cash lump sum, rather than having to take it as a regular income.

Another concern for government is the variations that we find in life expectancy across the UK. The 2014 ONS data identified that life expectancy for men born in Glasgow in 2012 is 72.6, in East Dorset it is 82.9. 25% of those in Glasgow are not expected to live to 65. The gap in years of good health is even greater. This presents governments with a long-term problem. How do they achieve greater equality in this instance? Do they focus resources on the areas that need it most? Do they legislate to address behaviour? Or do they rely on the provision of good advice – on diet, exercise and other factors?

Information has a role to play in both areas identified above. In April 2014, Steve Webb, suggested that in order to make good decisions at the point of retirement, people need to understand more about what lies ahead. He said:

People tend to underestimate how long they’re likely to live, so we’re talking about averages, something very broad-brush. Based on your gender, based on your age, perhaps asking one or two basic questions, like whether you’ve smoked or not, you can tell somebody that they might, on average, live for another 20 years or so.

This suggestion has led to some concerns being expressed at what appears to be an over-simplistic approach. Estimates can only be based on a mix of averages modified by individual information. Would the projections be shared with pension providers? What would you do if you exceeded your forecast life expectancy – by a long way – and had spent all your money? Could you sue someone?

Will your pension pot last as long as you will? The Telegraph, Dan Hyde and Richard Dyson (23/4/2014)
Scientists invent death test that will tell us how long we have to live Metro (11/8/13)
Games host Glasgow has worst life expectancy in the UK The Guardian, Caroline Davies (16/4/2014)
Pensioners could get life expectancy guidance BBC News Politics (17/4/14)
ONS reveals gaps in life expectancy across the UK FT Adviser Pensions, Kevin White (23/4/14)
Health care aid for developing countries boosts life expectancy Health Canal, Ruth Ann Richter (22/4/14)
A third of babies born this year will live to 100 This is Money.co.uk, Adam Uren (11/12/13)

Questions

  1. Thinking about the UK, what are the factors that might explain variations in life expectancy across different regions? How might the government address these differences? Why would they want to do so?
  2. Do the same factors explain variations between countries? Who can address these differences? Who would want to do so?
  3. If you could have a reasonable prediction of your life expectancy at 65, would you want it? How would your behaviour change if you were predicted a longer than average life expectancy? How would it change if you were predicted a shorter than average life expectancy?
  4. If you could have an accurate prediction of your life expectancy at 18, how would your answers differ? If this were possible, would it present any problems?