Why Public Policy’s Core Value Should Be Equality

Yves here. This humble blog, from its inception, has documented how highly unequal societies, in income and wealth terms, deliver worse outcome than ones with low disparities. Nations with highly concentrated wealth and income impose a lifespan cost even on the rich. They are unhappier. They score badly on other social indictors, from educational attainment to crime to teen births.

The authors below contend that humans have strong needs for fairness, which they translate into a preference of equality. It isn’t just humans:

But in this simple context, fairness and equality are the same. It is far from clear how fairness can be achieved in an acceptable and not unduly costly or bureaucratic manner in complex societies when there are existing large difference in their competence levels and their access to assistance. Just consider the criminal justice system. Just consider what happens when a poor person is charged with a crime. Do you think most public defenders, who are typically both badly underpaid and are assigned large case loads, can do anywhere near as good a job of representation as a top tier criminal defense attorney

By Mark Glick Professor, University of Utah, Gabriel Lozada, Professor of Economics, University of Utah, and Darren Bush, Professor, The University of Houston Law Center Faculty. Originally published at the Institute of New Economic Thinking website

Equality runs deeper than economics textbooks or policy fashions suggest. Across disciplines, evidence increasingly links more equal societies to stronger well-being, greater social trust, and healthier democracies, challenging the assumption that fairness must come at the expense of prosperity or economic dynamism.

Our new INET Working Paper argues that equality—particularly equality of opportunity—should serve as the primary goal of public policy. Drawing on evolutionary biology, anthropology, moral philosophy, epidemiology, and economic history, we show that human beings are hardwired for fairness and that societies marked by high inequality generate measurably less well-being. We reject the long-standing economic claim that equality comes at the expense of efficiency, showing instead that more egalitarian societies often perform better than unequal ones.

We begin the article with evolutionary foundations. For most of human history, people lived in small, cooperative, and largely egalitarian groups. Anthropological evidence from hunter-gatherer societies suggests that these groups enforced norms of sharing, punished free riders (not everyone was or is egalitarian), and resisted hierarchy. Evolutionary biologists and psychologists characterize this social behavior as “strong reciprocity,” which is a predisposition to cooperate and to sanction those who violate cooperative norms, even at personal cost.

Experimental economics reinforces these findings. In ultimatum and public goods games, individuals routinely sacrifice material gain to punish unfairness. Neuroscientific research shows that fair treatment activates reward centers in the brain, while unfairness triggers regions associated with disgust and anger. Even infants display an early bias toward equal distribution.

These scientific findings directly challenge the narrow conception of human motivation embedded in Neoclassical economics, which treats individuals as purely self-interested maximizers. We argue that public policy aligned with our biologically-determined moral psychology—particularly aversion to inequality and exploitation—will both command democratic legitimacy and enhance social welfare.

We then situate equality at the center of modern moral philosophy. Although philosophers disagree on what should be equalized—welfare, resources, capabilities, or primary goods—most begin from the premise of equal moral worth. Thinkers such as John Rawls, Amartya Sen, Ronald Dworkin, and G. A. Cohen converge on the importance of equal respect and opportunity. Rawls’s difference principle permits inequality only if it benefits the least advantaged. Sen’s capability approach shifts focus from income to substantive freedom—the real opportunities individuals possess. Dworkin argues for distributions that are ambition-sensitive but endowment-insensitive, compensating luck while respecting effort.

We emphasize that even utilitarianism—economics’ historical ethical foundation—contains egalitarian roots, since diminishing marginal utility implies that redistribution increases total welfare. Yet modern economics abandoned these elements, replacing interpersonal welfare comparisons with Pareto optimality and the Kaldor-Hicks criteria (note, not “criterion”), all of which obscure distributional consequences.

The constituencies that applaud recent attempts to ground public policy on greater output or greater GNP per capita or greater “abundance” often base their arguments on the myth of a tradeoff between equality and efficiency. But there is no empirical evidence for that claim: to the contrary, more equal societies experience equal or greater economic performance. Alternatively, these arguments may be based on assuming that the benefits of output trickle down to the rest of the population; but that assumption is rarely acknowledged and cannot be supported by convincing empirical evidence.

Or these arguments may assume that distribution does not matter; but this paper shows that it very much does. Some of these arguments may rely on a defeatist assumption that it is impossible to change the distribution of income or wealth within our existing capitalist framework, because such distributions are dictated by economic laws that public policies are incapable of affecting. But we show, quite to the contrary, that such distributions have been strongly influenced, in both directions, by public policy. Finally, these arguments may assume, dubiously, that future growth of output will automatically be distributed more evenly than output has been distributed in recent decades.

Empirical evidence further supports equality as a policy goal. The Easterlin Paradox shows that in rich countries, rising GDP per capita does not reliably increase happiness. Specifically, Easterlin showed that happiness in the United States had basically a flat trend since 1946, while GDP per capita was growing quickly. More strikingly, epidemiological research demonstrates that income inequality correlates strongly with social pathologies: lower trust, higher homicide rates, worse health outcomes, reduced social mobility, increased obesity and mental illness, and shorter life expectancy.

Across wealthy countries and U.S. states alike, inequality is correlated with these harms more powerfully than average income. While critics argue correlation does not prove causation, we note plausible causal mechanisms explained in the epidemiological literature: inequality heightens status anxiety, stress, and social fragmentation, which in turn generate measurable health and behavioral effects.

A central pillar of our argument is dismantling the equity-efficiency tradeoff. Arthur Okun’s leaky bucket metaphor suggested redistribution inevitably wastes resources. Historical and cross-national data, however, tell a different story. Periods of lower inequality in the United States—particularly from the New Deal through the postwar decades—were marked by high productivity growth and robust innovation. OECD and IMF research similarly finds that lower inequality is associated with stronger and more durable growth.

We outline mechanisms by which equality may enhance efficiency: stronger aggregate demand, greater social trust, broader human capital investment, and innovation stimulated by higher wages. We also highlight empirical findings that tax cuts for the wealthy have little effect on growth but reliably increase inequality.

Rejecting the view that markets mechanically determine inequality, we demonstrate how legal and institutional frameworks shape distribution. Under Franklin D. Roosevelt, policies such as progressive taxation, strong labor protections, financial regulation, and vigorous antitrust enforcement reduced inequality and coincided with exceptional productivity growth. After 1980, deregulation, weakened unions, reduced top tax rates, expanded intellectual property protections, and lax antitrust enforcement reversed these trends. The result was sharply rising top income shares and slower productivity growth.

We also criticize the economics profession for marginalizing distributional concerns. Textbooks emphasize consumer surplus and GDP while ignoring evidence that relative status and inequality shape well-being. This intellectual position has facilitated policy changes that favored capital over labor. Nordic societies provide a contrasting model. With strong welfare states, high union density, and cultural norms discouraging status competition, these countries combine equality with high living standards and strong social indicators.

We advocate policies aimed at expanding capabilities and equal opportunity: universal healthcare, educational equity, stronger labor protections, progressive taxation, financial regulation, robust antitrust enforcement, campaign finance reform, and reforms to corporate governance and intellectual property law.

Human beings evolved in cooperative, egalitarian environments. Moral philosophy affirms equal respect. Epidemiology and social science demonstrate that inequality corrodes well-being. Historical experience shows that public policy can either reduce or amplify inequality—and that greater equality need not sacrifice economic performance. Equality, we conclude, should serve as the North Star of public policy in advanced societies.