Return of Inequality in Modern Society? Test by Dispersion of Life-Satisfaction Across Time and Nations

Abstract

It is said that inequality is returning to modern nations and that this is manifest in the widening disparities in income in the late 20th century. This trend is attributed to neo-liberalism, globalisation and immigration, and is seen as a turn in the long-term trend towards a more civilised society. In this paper I challenge the idea of rising inequality. I argue that income difference falls short as an indicator of inequality and cannot be meaningfully compared across time. Instead I propose to measure inequality in another way, not by difference in presumed chances for a good life, but by the dispersion of actual outcomes of life, using the standard deviation of life-satisfaction as an indicator. Comparison across time in EU nations over the years 1973–2001 shows that the dispersion of life-satisfaction became smaller instead of larger. Comparison across 80 nations in the 1990s also shows lower dispersion in the most modern countries. So the trend towards greater equality seems to persist. If there is any truth in the theory that access to scarce resources has become more unequal, the tendency must have been compensated in some way, possibly by greater equality in personal capabilities.