Discussion on inequality is on the rise across the globe. Inequality issues and problems primarily discussed by specialists in the past have begun to be shared by the general public today. In particular, recent controversy surrounding the publication on the twenty-first century inequality by the French economist Thomas Piketty triggered serious interest in economic inequality across the world. Also in Korea, inequality discourse centered on ‘economic democratization’ has become more common than the past (Jang, 2015; Kim, 2012; Piketty, 2014).
It is desirable that economic discourse usually focused on economic growth and development has expanded to include the issues of inequality and distribution. As human society began to industrialize in the eighteenth century, economic growth was almost equal to development, and it is no exaggeration that economic development became the single most important goal for most countries, particularly after the collapse of communism in the late twentieth century. This phenomenon accelerated with globalization since the 1990s, and the idea that capitalist economic growth is a good thing became widespread across the world. However, the recent recurrence of economic crisis and increase in absolute and relative poverty has caused some to question the legitimacy of the kind of growth and development that we have pursued, and the public has started to realize that inequality is at the center of the problem. Along with this trend, global interests and efforts to solve the problems of inequality are also on the rise.
Then why inequality? Is inequality a really problem and should it be a target of social policy? Most people say that inequality is a problem, but when asked why inequality is a problem; their best answers are usually normative or ethical ones. This is because, despite the genuine interest and critical mind on inequality, we lack both academic and general discussion on why inequality is problematic. Existing research on inequalities tends to focus more on the trends or causes of inequality and less on the consequences and implications of inequality with which the question of inequality being a problem could be answered. In order to make an effective argument that inequality could be a threat to both individuals and society, however, discussion on the consequences and implications of inequality should be widespread, as well as the trends and causes of inequality (Hwang, 2015).
According to existing studies, the rising inequality of a society is strongly associated with an increase in various social problems (Hwang, 2015; Wilkinson & Pickett, 2009). For instance, societies with a higher level of inequality have lower levels of social trust, social mobility, and educational achievement while showing a higher level of psychological problems, suicide rates, and imprisonment rates. The primary argument here is that economic inequality tends to raise social tensions and widen material, psychological, and cultural disparities among people, having a negative impact on both individual and societal well-being.
In this regard, this study aims to extend the existing argument on the (negative) consequences of inequality, focusing more on individuals. In particular, we empirically investigate the relationship between individuals’ perception of economic inequality and the measures of societal health, such as one’s evaluation of social trust and social mobility in the society. We further examine how this relationship varies by individuals’ objective and subjective social economic status in order to discuss its implications for the complex social problems and conflicts that face current Korean society from the perspective of inequality and social stratification.
In the following section, existing literature and theories on the relationship between economic inequality and individual/social problems are reviewed. Next, the data, measurement, and analytic strategies are described before the results of statistical analysis are presented. In the conclusion, the implications of the findings of this study are further discussed with potential future directions in the field.
Background and Research Questions
Literature Review and Theoretical Background
Although inequality has various impacts on individuals and society, existing research has mostly focused on the economic sphere, particularly on the relationship between inequality and economic growth. There exist three stances in this field (OECD, 2011): First, inequality has a positive effect on economic growth since it functions as an incentive and induces desirable competition among individuals and societies, resulting in innovation, efficiency, and increased productivity. Second, contradicting the first opinion, inequality has a negative effect both on economic growth and social development because it widens socioeconomic disparities among people and causes many social conflicts not conducive to economic growth. Lastly, the relationship and direction is not clear due to many other factors that affect the association between inequality and economic growth. According to a series of recent studies on this topic, however, the opinion that the impact of inequality on economic growth is either negative or null at best became the dominant one (IMF, 2016; Rajan, 2011).
In recent studies, the discussion on the consequences of inequality has been more diversified, including political, social, and public health arenas. First, one of the most representative arguments in the political sphere regarding the consequences of inequality is the median voter theorem (Meltzer & Richard, 1981). According to the hypothesis, rising inequality necessarily results in political inequality and polarization; thus, the problems associated with rising inequality can be solved by politics and voting. For instance, as inequality rises, it is the middle class who are negatively affected the most as they are in the middle of income distribution – thus median voters. However, they are the biggest group of voters by definition and will act on and vote for their own class interests; as a result, the problems of inequality will be solved by political means. However, the opposite tendency is found in realty. In other words, as inequality rises, the field of politics changes in a way to more closely reflects the voices of the upper class, not the middle class, so that politics actually tend to intensify existing inequalities, not to lessen those (Bonica et al., 2013). Consequently, rising inequality has a negative impact on politics and democracy, which is hard to solve through the current political means.
Next, the impact of inequality on individual and societal health is well summarized by Wilkinson and Pickett’s studies (1997; 2009). According to their arguments, rising inequality makes people constantly aware of their relative positions in society, and this in turn induces status competition between them to achieve higher social status. As a result of this game of status competition, both the winners and losers of the game suffer from stress and various anxieties. Thus people in a society with a higher level of economic inequality tend to experience more psychological problems, such as depression and suicidal thoughts, and the level of physical health problems, which is related to stress, is also found to be higher. If socioeconomic inequality is the fundamental cause of health inequality (Link & Phelan, 1995), we can easily expect that rising economic inequality will result in health inequalities.
Lastly, in the social sphere, the negative consequences of inequality are discussed in various fields and layers (Kang & Lee, 2013; Putnam, 2001; Wilkinson, 1997). As the inequality of income and wealth increases, this naturally leads to physical separation among people, such as residential segregation. In addition, differential consumption patterns by social strata tend to widen cultural disparities between individuals and groups, and if these factors interact and accumulate within and across generations, it finally widens psychological distance across different socioeconomic strata. Consequently, the level of mutual trust and social cohesion decreases while people’s perception of future prospects for themselves and their children become negative. This is why the level of social trust and chances for intra- and intergenerational mobility tend to be low in a society with a higher level of economic inequality.
In sum, at the core of inequality is economic inequality of income and wealth, and economic inequality results in various types of social inequalities, having negative consequences in political, economic, and cultural spheres. In the end, if we regard economic inequality as differentiated resources or possibilities that could be mobilized to widen distances and disparities among societal members, and if we consider that most social and health problems directly reflect the disparities, we can easily expect that economic inequality and its rise would have negative consequences for the society as well as its members.
Research Questions and Hypotheses
Despite the significance of inequality, the existing studies on the consequences of inequality tend to focus mostly on the objective level of inequality and its implications at the societal level. In order to fully understand the nature and consequences of economic inequality, however, it is also essential to examine the subjective aspect of economic inequality at the individual level, i.e., an individual’s perception of inequality. Given that the correlation between the objective level of economic inequality and an individual’s subjective perception of inequality is low (Hauser & Norton, 2017), it is an empirical question to see if the perception of inequality would have a similar or independent effect on various individual and social outcomes as the objective level of inequality does. In addition, perception of inequality has its own significance in that it becomes the foundation of one’s belief about the reality of inequality and results in political actions and demands for changes (Brunori, 2017). In the case of the Arab Spring, it was the negative perception of inequality, not the realty of inequality that triggered the social revolution (Verme, 2014).
In this regard, we examine the relationship between individuals’ perception of inequality and the measures of societal health. In particular, the impact of perceived inequality on people’s evaluation of social trust and social mobility are examined since they are known to be most negatively affected by rising inequality (Brunori, 2017). Some studies have documented that perceived inequality has a negative effect on individual subjective well-being measures, such as self-rated health, but its effect on societal-level measures has not received as much attention (Oshio & Urakawa, 2014). Accordingly, we have two primary hypotheses to be tested in this study:
Individuals who perceive that the level of economic inequality in their society is high tend to have a lower level of social trust;
Individuals who perceive that the level of economic inequality in their society is high tend to have lower expectations of social mobility for themselves (intragenerational mobility) and for their children (intergenerational mobility).
Data, Measurement, and Analytic Strategy
This study utilizes the data from the Korean Academic Multimode Open Survey for Social Sciences (KAMOS). KAMOS, with support from the National Research Foundation of Korea, is conducted and managed by the Center for Asian Public Opinion Research and Collaboration Initiative (CAPORCI) at Chungnam National University of Korea and was launched in 2016. The primary aim of KAMOS is to establish a new platform for social science data collection in which interested social scientists can easily participate in the questionnaire building and data collection processes based on multimode or mixed-mode approaches. In 2016, for instance, three separate surveys were conducted for KAMOS: the first one was a conventional face-to-face survey based on a random probability sampling with a full set of survey questions, and the second and third surveys were conducted online using randomly selected members of a panel of respondents from the first survey with a limited set of more timely questions.
The first face-to-face survey data of 2016 utilized for this study includes basic social survey items and indicators, such as demographics, household economic conditions, various attitudes towards society, etc., as well as questions about special topics. The dataset also includes our core variables for analysis, i.e. respondent’s perception of inequality and evaluation of social trust and chances for intra-/intergenerational social mobility, as well as control variables that need to be adjusted for in a statistical analysis. The size of our sample is 2,000 respondents.
Measurement and Descriptive Statistics
Table 1 presents the measurement and descriptive statistics of the variables used for this study. A variable name, response categories, means (for continuous variables) or percentages (for categorical variables) for each variable are included in the table based on the analysis of 2,000 respondents.
First, the chief explanatory variable of our analysis is individuals’ perception of economic inequality in Korea. The perception variable was measured by respondents’ answers to the survey question, “How do you judge the degree of economic equality in Korean society? Score 0 to 10, 0 being extremely unequal and 10 completely equal.” The mean is 4.5 points, thus Korean people perceive the distribution of income and wealth to be somewhat unequal (see Figure 1 for the specific distribution of the perception).
Next, we have a set of dependent variables classified into two groups with two sub-variables respectively: individuals’ evaluation of the level of social trust (Korean society/Korean people) and the chances for social mobility (intra-/intergenerational mobility). First, the social trust toward Korean society was measured by respondent’s answers to “Do you believe that the society of South Korea is trustworthy?” They were asked to answer “On a scale of 0 to 10, 0 being ‘completely untrustworthy,’ and 10 being ‘completely trustworthy…’” and the social trust toward Korean people was also measured by the same scale. The means were 5.5 points for Korean society and 5.8 points for Korean people. So, Koreans have a slightly higher level of trust in their people than their society (see Figure 2 for the specific distribution of the social trust).
The second set of dependent variables, the ones on social mobility, is also measured using two variables: intragenerational and intergenerational mobility. Intragenerational social mobility was measured by respondent’s answers to “Do you believe that an individual can climb up the socioeconomic ladder if he/she tries hard enough?” and the intergenerational social mobility was measured by respondents’ answers to “Do you believe that the socioeconomic status of your children’s generation will be better than your generation’s?” According to the preliminary analysis, more than half of the respondents answered that significant improvement or some improvement was possible to both questions, but the proportion was higher for intergenerational mobility (55.2%) than for intragenerational mobility (52.5%) (see Figure 3 for the details of the distributions). The descriptive statistics of the rest of covariates (socioeconomic status, subjective happiness, demographics, etc.) are also included in Table 1.
First, cross-tabulation analyses were conducted for our chief explanatory variable (i.e., the perception of economic inequality) and other important covariates, such as subjective and objective socioeconomic status. Next, a series of regression analyses were conducted for a set of dependent variables explained earlier: when the dependent variable is considered continuous (trust toward Korean society or people), linear regression was used while logistic regression was used for binary dependent variables (intra-/intergenerational social mobility). The chief explanatory variable for all the regression analysis is the perception variable, and the respondent’s demographics, household income, subjective class, and subjective happiness were controlled for in the estimation process.
Cross-tabulation Analysis: Association Between Perceived Inequality and Social Class
Prior to regression analysis, basic cross-tabulation analysis between the perception of economic inequality and both subjective and objective social class variables was conducted. First, Table 2 shows the result of the cross-tabulation analysis between perception of inequality and the subjective social class variable. The correlation between the two variables are very high in that those who believe their socioeconomic status is higher tend to perceive Korean society as more equal. For instance, 77.0% of those who consider themselves to be in the lower social class believe that Korean society is unequal while only 6.6% responded equal. The pattern, however, becomes reversed as the respondent’s subjective social class becomes higher: those who believe they belong to the middle class still were more likely to say Korean society is more unequal (39.0%) than equal (14.8%) but the difference was smaller than the subjective lower class, and it becomes totally opposite for those who consider themselves to be upper class (23.6% unequal vs. 58.1% equal).
Next, Table 3 shows the cross-tabulation analysis of the perception and the objective measure of social class, household income. Overall, a similar pattern and tendency to subjective social class was found, but the relationship is not as strong. In other words, the general tendency is that those who have lower household incomes perceive Korean society to be more unequal and those who have higher household incomes perceive the opposite, but compared to the subjective social class analysis, the proportion of equal among the lower social class is relatively higher (19.5%), and that of unequal among the upper social class is also relatively higher (40.2%).
In sum, the perception of economic inequality has a strong relationship with both measures of social class, and the association appears stronger for the subjective social class variable than the objective measure of social class. In the following section, we will further examine if the relationship among these (explanatory) variables changes in the context of regression analysis of social trust and social mobility.
Table 4 presents four sets of regression analyses. The first two columns are the results of the linear regression analysis with the two social trust dependent variables (trust in Korean society and people), and the last two columns show the results of the binominal logistic regression analysis with the two social mobility dependent variables (intra- and intergenerational mobility). In the table, the estimated regression coefficients significant at the 5% level are marked in bold.
First, according to the results on the two social trust dependent variables, the perception of economic inequality has a significant effect on both trust toward Korean society and people, even after controlling for other covariates. To be more specific, the estimated regression coefficient of the perception of trust in Korean society is 0.319, which implies that as respondents perceive the level of economic inequality in Korea to be more equal by one point, their level of trust in Korean society increases by 0.319 points. Likewise, the estimated coefficient of the perception of trust in Korean people is 0.200, which is lower than Korean society, but it still has a positive and significant effect on the level of trust toward Korean people. In other words, there is a strong association between the perception of economic inequality and social trust, and as respondents perceive the level of economic inequality of Korea to be more equal, they tend to have a higher level of trust toward both Korean society and people, supporting Hypothesis 1.
Of the other covariates included in the first two models, the effect of the subjective social class is worth noting. If respondents believe that they belong to a higher social class, they show a higher level of trust both in Korean society and people, trusting Korean people more than the society. Equally interesting is that the effect of the objective social class variable – the household income – turns out to be insignificant once other covariates are controlled for. One’s sex, age, marital status, region, and subjective happiness also do not show meaningful patterns in the explanation of social trust, but the level of education has some significant relationship to the level of trust toward Korean society, with the higher educated being less trusting of the society.
Next, the last two regression models examine the relationship between one’s perception of economic inequality and belief about social mobility. The overall pattern of significance is similar to those from the first two models: As was the case for the social trust dependent variables, those who perceive Korean society to be more economically equal tend to believe that the chances for both types of social mobility are higher, supporting Hypothesis 2, stated earlier. The effect of the subjective class variable is also worth noting in that those with a higher value of subjective social class are more likely to believe that the chances for intra- and intergenerational social mobility are higher in Korean society. What is different from the previous trust models is the effect of the subjective happiness variable: one’s level of subjective happiness did not have a significant relationship to the social trust dependent variables, but it had one with the social mobility variables, implying that those with a higher level of subjective happiness tend to more positively evaluate the chances for social mobility in Korean society.
As societal interest in inequality increases in Korea, both public and academic discussion on inequality is also on the rise. This trend of rising interest in the effects of inequality is socially desirable, regardless of one’s political stance toward inequality, in that a society with a higher level of economic inequality is known to have more social problems and conflicts. However, in order to have more effective discussions on the problems of rising inequality, it is essential to study the consequences and implications of inequality in more arenas of social and individual life.
In this vein, this study examined one of the significant consequences of inequality, particularly on individuals: the relationship between individuals’ perception of inequality and their evaluation of societal health, such as social trust and social mobility. According to the statistical analysis of the KAMOS data, those who perceive the level of income and wealth inequality in Korea to be more unequal tend to have a lower level of trust in Korean people and society as well as a lower expectation for both intra- and intergenerational social mobility. Given that a society cannot be considered a healthy if its members do not trust their society and its people and have less hope for social mobility, we have provided another piece of empirical evidence that inequality, particularly people’s perception of economic inequality, could have a negative impact on the overall level of societal health.
Moreover, it is important to see that the relationship between perceived inequality and the measures of societal health still stay significant even after accounting for an individual’s objective and subjective social class. In other words, people with a negative perception of inequality tend to be less trusting of their society and their future prospects regardless of their class background. This implies that, as Wilkinson and Pickett (2009) argued, inequality is harmful not just to the poor or lower class, but to all, including the affluent. If so, we could make a stronger case that policies and societal efforts to reduce the overall level of inequality are not just for the poor but also for the rich who would generally stand against those actions.
Another implication of this study is that it extended the scope of the consequence-of-inequality studies from the society-oriented toward the individual-oriented. As discussed above, most existing literature in this field examines the relationship between inequality and its consequences measured at the societal level. However, the negative effect of inequality does not stop at the society, but it also permeates its individual members. In order to better understand the nature and consequences of inequality, therefore, more studies on the effect of inequality on individuals’ perceptions, beliefs, actions, and behaviors need to be conducted, particularly on the ones adverse to the maintenance of individual and societal health.
Sun-Jae Hwang is an assistant professor in the department of sociology at Chungnam National University, Daejeon, Korea. He received his Ph.D. in sociology and M.A. in statistics from the University of Michigan, Ann Arbor. His research areas include social stratification/inequality, social systems/institutions/policies, and quantitative methods.
He can be reached at (34134) Department of Sociology, College of Social Sciences, 99 Daehak-ro, Yuseong-gu, Daejeon, Korea or by e-mail at email@example.com
All correspondence concerning this article should be addressed to Sun-Jae Hwang at Department of Sociology, College of Social Sciences, 99 Daehak-ro, Yuseong-gu, Daejeon, Korea or by e-mail at firstname.lastname@example.org.
Date of Submission: 2018-10-28
Date of the Review Result: 2018-11-09
Date of the Decision: 2018-11-15