Friday, 23 July 2010

Fact-checking The Spirit Level debate

Thanks to all who organised and attended the debate at the Royal Society of Arts on 22nd July. Due to the structure of the event, Peter Saunders and myself did not get the chance to reply to Wilkinson and Pickett's presentation but, although I haven't yet listened back to the debate (I'll post the video link when it is available), there are a few basic factual errors that need clearing up...


1. Trust

In response to my claim that the correlation between trust and inequality depends entirely on the Scandinavian countries, Pickett presented a graph which showed the same data (from The Spirit Level) but with the Scandinavian countries excluded. A correlation remained, albeit weaker.

This is true, but the two critical problems with their graph on trust remain: (1) As with all Spirit Level graphs, it excludes several wealthy countries; (2) it relies on data from the 1990s which has been superseded by the 2000s data (which is used in The Spirit Level Delusion). When the most recent data is used there is clearly no correlation between trust and inequality.



Source: World Values Survey


2. Happiness

Richard Wilkinson dismissed the evidence showing that happiness is not correlated with income inequality—but is (positively) correlated with income—by saying that happiness does not have a social gradient.

This is not true. Happiness certainly does have a social gradient. One of the best known demonstrations of this can be found in a paper by Robert Easterlin from 1974. It clearly shows happiness rising in line with income.


This particular article gave rise to the so-called 'Easterlin Paradox' and is one of the most famous papers in economics. It is certainly the most famous study in the field of 'happiness studies', and as such it is hard to believe that Wilkinson can be unaware of it.


Source: Does Economic Growth Improve the Human Lot? Some Empirical Evidence, Robert Easterlin, 1974



3. Health

In response to our evidence showing no relationship between inequality and life expectancy, Pickett referred to a 2009 study from the British Medical Journal. Wilkinson and Pickett also cited this study in their response to Peter Saunders and in their response to a recent critique I co-authored in the Wall Street Journal. In the latter, they said that the BMJ study "shows unequivocally that inequality is related to significantly higher mortality rates."

In fact, the BMJ study concludes that:

The results suggest a modest adverse effect of income inequality on health, although the population impact might be larger if the association is truly causal... The findings need to be interpreted with caution given the heterogeneity between studies.

Unequivocal?



4. The Spirit Level was written in 2007?

Kate Pickett referred to one of my 20 Questions, which reads:

Why do you say that the USA’s decline in homicide ended in 2005 when 2008 saw the lowest number of homicides since 1965? As you must know, America's murder rate has halved in the last two decades despite rising inequality.

All of which is true. Wilkinson and Pickett claim that the US homicide rate "started to rise again" in 2005 (p. 142). In fact, the murder rate fell in 2007 and 2008 and is now at its lowest rate since 1965.

During the debate, Pickett explained that there was a simple reason for them ignoring the ongoing decline in the US homicide rate—their book was written in 2007! That got a good laugh, but it is not true. As can be seen from the references at the end of The Spirit Level, they were still writing—and finding new sources—well into 2008.

For example:

(95) S. Bezruchkra et al., 'Income economic equality and health: the case of postwar Japan', American Journal of Public Health, (February 2008)

(298) K. Pickett & R. Wilkinson, 'People like us: ethnic group density on health', Ethnicity and Health, (September 2008)

(379) W. Hutton, 'Let's get rid of our silly fears of public ownership', The Observer, (April 2008)

Clearly there was time to acknowledge the US homicide rate in 2007, if not 2008.


5. Inequality in Japan

During the Q & A session, I mentioned that there are questions over how equal the distribution of wealth in Japan really is. I pointed out that Gini figures from the OECD show Japan to be on a par with Spain and Portugal (this was a mistake on my part—I meant to say Spain and Greece). Pickett responded by saying that these figures are for Gini before tax.

This, again, is not true. The OECD provides inequality data both before and after tax. The most recent data, from the mid-2000s, show:

Japan (before tax): 0.44

Japan (after tax): 0.32

Spain (before tax): 0.41

Spain (after tax): 0.32

Greece (before tax): 0.43

Greece (after tax): 0.32

Sweden (before tax): 0.43

Sweden (after tax): 0.23

As the OECD states in a 2006 article:

The Gini coefficient measure has risen significantly since the mid 1980s from well below to slightly above the OECD average and the rate of relative poverty in Japan is now one of the highest in the OECD area.

I have no firm view on which of the two sources (UN or OECD) have the most realistic figure for Japan, but as a point of fact the OECD figures I mentioned were after tax.

Source: OECD

5 comments:

DocRichard said...

I note that the trust figure excludes Scandinavia. While I understand the statistical problem with outliers, it seems absurd and counter-sense that they are simply excluded. They should be included, but perhaps brought within 2 SD of the mean. Also, the onus is on your side to find a mechanism for the Scandinavians' more cohesive society. We share a lot of genes with the Scandinavians, thanks to the Vikings' predilection for rape. Can you find that social cohesion is better in areas of the UK with higher proportions of Viking genes, for instance?

DocRichard said...

When were the US 2008 homicide figures actually published?

DocRichard said...

In a sharp division of opinion, the most significant facts tend to be those which are accepted by both sides. In this instance, it is infant mortality, which has a robust and undeniable relationship with inequality. Infant mortality tends to act as the canary in the mine. Do you have any comment about this? Do you accept a causal relationship here, and if not, how do you explain the relationship?

Snowdon said...

DocRichard,

The graph above is in response to a specific point made by Kate Pickett, who said during the RSA debate that a correlation between trust and inequality remained even after Scandinavia was excluded. In fact, that is only true if one uses the exact set of countries and the exact (older) set of figures used in The Spirit Level.

The purpose of excluding outliers is to see whether a statistical correlation remains amongst the rest of the countries. This is normal practice when trying to separate correlation from causation. To take a flippant example, more equal countries do not tend to have more sumo wrestling once Japan is excluded as an outlier. Similarly, 24 countries do not show a correlation with trust once the Nordic states are excluded.

A correlation which relies on 4 out of 28 cases is no correlation at all. It does not show that more equal societies are more trusting. At best, it shows that the Scandinavian countries are more trusting. To say that this is because of the distribution of wealth is pure speculation, and is not borne out by evidence from the rest of the countries.

Snowdon said...

DocRcihard,

The 2008 homicide figures were published at some point in 2009. I'm not sure when, and I accept that they probably came out too late for Wilkinson and Pickett to include them in hard-back edition of The Spirit Level. The same cannot be said of the 2007 figures, which also showed a drop in the murder rate. Certainly, W & P were premature in claiming that 2005 signalled the start of a rise in the murder rate. Presumably they will correct that in future editions.

Infant mortality is the one criteria for which Peter Saunders found a statistical correlation with inequality. But correlation does not equal causation and I explain the biological and demographic reasons for the apparent correlation in Chapter 5 of The Spirit Level Delusion. In short, there is a much close correlation when you divide the countries by geographical region, for reasons that are well-known to those who have studied the biological causes of infant mortality (congenital abnormality, premature birth, multiple birth etc.) If you look at the actual medical causes of infant mortality in rich societies, it becomes clear that blaming the pscychosocial effects of inequality is not only empiracally unsound, it is also implausible even in theory. No wonder, then, that Wilkinson and Pickett do not reference a single study in The Spirit Level to support this claim.