So I have a dataset that I have curated from public data over the last 7 years and continuously updated with the latest data. I include data focusing on political economics (look at this blog, surprised?) and it includes lots of variables. For this regression, I handpicked the following statistics:
- pfi 2021 is the Press Freedom Index data from 2021.
- GDP per capita
- CPI score 2021 is Corruption Perceptions Index
- OECD is a boolean on whether the country is a member of the OECD or not.
- Schengen Area is a boolean on whether the country is a member of the Schengen Area or not.
My data confirms what has been published in Scientific American in an even more thorough study. Income inequality is the biggest driver to homicide.
https://www.scientificamerican.com/article/income-inequalitys-most-disturbing-side-effect-homicide/
This helps explain why gun control has a much smaller effect than one would expect.
The impact of inequality on homicide (and we know that is the causal direction based on peer-reviewed studies, far more thorough than my messing around with python) is so strong that even if we use the same formula and put inequality as our dependent variable we see this:
OK. So we know that if we really want to reduce our homicide rate, we need to reduce our inequality rate.
Off the top of my head, policies I can think of which will help reduce inequality include:
- Universal Preschool increases productivity by helping (mostly) young mothers stay in the workforce while also reducing inequality.
- Debt-free college, seems self-explanatory how it increases productivity and reduces inequality.
- Universal health care and health insurance are there for you whenever you need it. Sick people are less productive, boosting inequality.
- Expanding the child tax credit, giving children more opportunities early in life, benefits them and the entire economy for the rest of their lives.
- Pay for expanded social programs by increasing the tax rates on the top 1% of income earners. Reverse the Bush and Trump tax changes.
This article from the Michigan Journal of Economics points out how increasing the minimum wage will reduce inequality: https://sites.lsa.umich.edu/mje/2022/02/08/rising-economic-inequality-in-the-us-key-statistics-and-root-causes/
Which makes sense. It also benefits the budget. Increasing the minimum wage means more money comes from employers’ pockets, and less money needs to come from the government to support people in poverty.
A new open-access paper from the International Labour Organization finds that the main driver of inequality in the United States is a drop in productivity growth. https://www.ilo.org/global/publications/working-papers/WCMS_912336/lang–en/index.htm
Other factors help explain the difference between income groups, skilled vs unskilled, but only productivity growth explains the gaps within each of those two classes.
Why is productivity slowing down? According to researchers at Oxford, the slowdown has been seen across developed countries, not just in the United States, and has occurred due to various factors. The bulk of the slowdown happened between 2005 and 2010, or around the time the oldest Baby Boomers were starting to retire. The drop was sudden, and within 5 years, the average productivity growth rate across the countries they studied had declined from around 2% to 1%. No single factor can explain the reduction in productivity growth rates.
Inequality is a complex topic that receives a lot of research from many hard-working professionals. Teasing out the underlying causes is challenging; the most difficult portion, of course, is finding the data you need to find the reality behind the truth, and there is always the risk of having underlying variables. Whether you are doing statistical analysis or a controlled A B experiment, this will always be true. More research will certainly be done, but we do have more than enough research to know where to start, and the 5 proposals I have in this article are a good place to start.