Socio-Economic Inequality in the World Today

May 10, 2019 news

This year, V-Dem collected data on a new set of survey questions on exclusion. The questions examine the extent to which exclusion marks different groups in society. This post looks into exclusion by socio-economic group.

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Figure 1: Changes in exclusion by socio-economic group from 2008 to 2018.

Exclusion by Socio-Economic Group occurs when individuals are denied access to services or participation based on their identity or belonging to a particular group. 

Socio-economic position is based on attributes of wealth, occupation or other economic circumstances such as owning property. Exclusion of these groups occurs when, for example, poverty prevents people from voting, when the poor do not have the same access to justice as the rich, or when fees associated with justice, health or education are set at a rate that is unaffordable for poorer individuals.

Fig 1 above show changes over the last 10 years in V-Dem’s Socio-Economic Group Exclusion Index. Countries above the diagonal line have improved – meaning that the extent to which socio-economic groups are excluded has gone down – while exclusion by socio-economic group has increased (become worse) in countries below the line.

Exclusion of socio-economic groups is lessening in for example Jordan, Peru and Guyana, while increasing exclusion registers in Croatia, Brazil and Mongolia.

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Figure 2: Substantial and significant changes in countries with regards to exclusion by socio-economics group indicators in the last ten years, 2008-2018.

In Fig 2 above we look closer at the five indicators that go into the overall index for exclusion by socio-economic group. These indicators measure exclusion of socio-economic groups in five distinct areas: from equal access to political power, equal enjoyment of civil liberties, access to public services, state jobs, and business opportunities provided by the state.

The figure shows the number of countries that made substantial and significant declines and advances by every indicator in the Exclusion by Socio-Economic Group Index. For an indicator above the diagonal line, more countries have improved over the last 10 years, than become worse. For countries below the line, more countries have seen an increase in exclusion.

There is a particularly pronounced worsening in terms of exclusion from access to civil liberties by socio-economic groups. In 11 countries, things have gotten significantly worse over the last ten years while improving in only 6.

Inequality occurs when certain groups of people in society have access to fewer resources than other groups. As discussed below, different types of exclusion are often linked to each other where exclusion in one aspect may indirectly lead to the exclusion in other aspects.

 

Importance in Tackling Exclusion by Socio-Economic Group

Exclusion by socio-economic group in terms of civil liberties or equal access to political power for example, does not occur in isolation. It is connected to other types of exclusion, perhaps in particular in countries where basic necessities such as good quality healthcare and equal, free education are not provided by the state. In such contexts, the level of income – that is socio-economic group – largely determines the quality and access to healthcare and education available to individuals and their families.

Consequently, different groups of people have different levels of access to such goods and services, which also plays an important role in determining people’s life outcomes.

Additionally, the stress of having to deal with such instability has multiple societal effects which cannot be ignored. These include increased anxiety, mistrust, mortality, lower social cohesion and weaker governance.[1]

 

Regime Type and Socio-Economic Exclusion

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Figure 3: Changes in exclusion by socio-economic group from 2008 to 2018 by regime type.

Fig 3 shows that the regime type of a country also plays a critical role in determining the level of exclusion by socio-economic group. Liberal democracies tend to have more inclusive welfare systems in place, and in general be more equal societies than countries with other types of regimes. We can see this in Fig 3 where almost all liberal democracies (dark blue dots) gather in the top-right corner with low levels of exclusion by socio-economic group in both 2008 and 2018. Their welfare structures, redistributive tax models, and provision of effective guarantees for civil rights are positively related to a lower level of socio-economic exclusion.

Liberal democracies are defined by a high level of political inclusion. Looking at Fig 3, it stands to reason that there is no coincidence that this high level of political equality allowing for freedom of expression by ordinary people and giving them a real influence on policies, has resulted in much lower levels (on average) of exclusion of socio-economic groups in areas beyond politics too. Genuinely addressing the opinions, needs and ideas of the citizens, results in a relatively egalitarian ambition in politics. This translates to a greater level of inclusion of the different groups in these societies.

Autocratic regimes are in general unequal societies where many groups are systematically excluded in many areas. It is not unreasonable to connect the concentration of power in a small group of people, with little consideration for the needs of different groups within societies inevitably leads to different forms of exclusion. In short, democratic governance is associated with much less exclusion of socio-economic groups across many areas.

The variation across regime types is depicted in Fig 3 above and the figure also shows that there has been little change in this regard over the past 10 years.

 

Crisis in Brazil

Brazil provides an example of the interplay of the various structures mentioned above. The country’s level of inequality was drastically reduced from 1988 to 2015. This decreased the share of population living below the poverty line from 37% to 10%, pulling 28 million people out of poverty. During this period, the provision of basic and essential services were expanded. More progressive taxation policies were adopted, greater quality of public services and greater inclusion in education of adolescents and university aged youth, especially young blacks – a frequently discriminated against social group – was introduced. The Gini co-efficient consequently decreased from 0.616 to 0.515 during this period.

However, a fiscal crisis broke out in 2015. Economic crises and multiple cases of political corruption following this, led to the state withdrawing from the redistribution of resources and opening the way for a new cycle of growing inequalities. Changes were also made in the constitution to reduce the scope of social welfare provided by the state. These occurred without input or contributions from the population. The Brazilian regime has declined to one in which inclusion has taken a back seat. This is also depicted in Fig 3 which shows how exclusion according to socio-economic group has significantly and substantially worsened since 2008.


 

[1] (Buttrick & Oishi, 2017) “The psychological consequences on income inequality.” Social and Psychology Compass, no. 11(3) (2017). doi:0.111/spc3.12304.

 

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