Unraveling the dynamics of wealth inequality and the impact on social mobility and health disparities

Abstract

Inequalities in wealth, income, access to food and healthcare have been rising worldwide in the past decades, approaching levels seen in the early 20th century. Here we study the relationships between wealth inequality and mobility for different segments of the population, comparing longitudinal surveys conducted in the USA and in Italy. The larger wealth inequality observed in the USA is reflected by poorer health conditions than in Italy. We also find that in both countries wealth mobility becomes slower at the two extremes of the wealth distribution. Households trapped in a state of persistent lack of wealth are generally experiencing greater food insecurity and poorer health than the general population. We interpret the observed association between inequality and immobility using a simple agent based model of wealth condensation driven by random returns and exchanges. The model describes well survey data on a qualitative level, but the mobility is generally overestimated by the model. We trace back this discrepancy to the way income is generated for low-wealth households which is not correctly accounted by the model. On the other hand, the model is excellent in describing the wealth dynamics within a restricted class of ultra-wealthy, as we demonstrate by analyzing billionaires lists. Our results suggest that different forms of inequality are intertwined and should therefore be addressed together.