Effects of income inequality, researchers have found, include higher rates of health and social problems, and lower rates of social goods, a lower population-wide satisfaction and happiness"Happiness: Has Social Science A Clue?" Richard Layard 2003Blanchard and Oswald 2000, 2003 and even a lower level of economic growth when human capital is neglected for high-end consumption. For the top 21 industrialised countries, counting each person equally, life expectancy is lower in more unequal countries (r = -.907). A similar relationship exists among US states (r = -.620).

2013 Economics Nobel prize winner Robert J. Shiller said that rising inequality in the United States and elsewhere is the most important problem.

Health

British researchers Richard G. Wilkinson and Kate Pickett have found higher rates of health and social problems (obesity, mental illness, homicides, teenage births, incarceration, child conflict, drug use), and lower rates of social goods (life expectancy by country, educational performance, trust among strangers, women's status, social mobility, even numbers of patents issued) in countries and states with higher inequality. Using statistics from 23 developed countries and the 50 states of the US, they found social and health problems lower in countries like Japan and Finland and states like Utah and New Hampshire with high levels of equality, than in countries (US and UK) and states (Mississippi and New York) with large differences in household income.

For most of human history higher material living standards – full stomachs, access to clean water and warmth from fuel – led to better health and longer lives.Pickett and Wilkinson, The Spirit Level, 2011, p. 5. This pattern of higher incomes and longer lives still holds among poorer countries, where life expectancy increases rapidly as per capita income increases, but in recent decades it has slowed down among middle income countries and plateaued among the richest thirty or so countries in the world. Americans live no longer on average (about 77 years in 2004) than Greeks (78 years) or New Zealanders (78), though the USA has a higher GDP per capita. Life expectancy in Sweden (80 years) and Japan (82) – where income was more equally distributed – was longer.Pickett and Wilkinson, The Spirit Level, 2011, p. 82.(At the same time however, there is a strong connection between average income and health within countries. Example: Comparing average death rates in United States zip code areas organized by average income finds the highest income zip codes average a little over 90 deaths per 10,000, the poorest zip codes a little over 50 deaths and a "strikingly" regular gradient of death rates for income in between. source: Figure 1.4, Pickett and Wilkinson, The Spirit Level, 2011, p. 13, Authors: "What is so striking about Figure 1.4 is how regular the health gradient is right across society". Data from: ) It has been suggested that the decline in life expectancy in the United States beginning in the late 2010s is linked to extreme inequality.

In recent years the characteristic that has strongly correlated with health problems in developed countries is income inequality. Creating an index of "Health and Social Problems" from nine factors, authors Richard Wilkinson and Kate Pickett found health and social problems "more common in countries with bigger income inequalities",Pickett and Wilkinson, The Spirit Level, 2011, pp. 306–9. Figure 2.2 found on p. 20 and this page the authors found a Pearson Correlation Coefficient of 0.87 for the index and inequality among 20 developed countries for which data was available. Pickett and Wilkinson, The Spirit Level, 2011, p. 310. and more common among states in the US with larger income inequalities.a coefficient of 0.59 for 40 US states for which data was available (the index for US states did not include a component for mobility in its index). For both populations the statistical significance p-value was >0.01. Pickett and Wilkinson, The Spirit Level, 2011, p. 310. Other studies have confirmed this relationship. The UNICEF index of "child well-being in rich countries", studying 40 indicators in 22 countries, correlates with greater equality but not per capita income.compare figures 2.6 and 2.7 in Pickett and Wilkinson, The Spirit Level, 2011, pp. 23–4. Data from An overview of child well-being in rich countries The United Nations Children's Fund, 2007 Pickett and Wilkinson argue that inequality and social stratification lead to higher levels of psychosocial stress and status anxiety which can lead to depression, chemical dependency, less community life, parenting problems and stress-related diseases.The Spirit Level: how 'ideas wreckers' turned book into political punchbag| Robert Booth| The Guardian| August 13, 2010

In their book, Social Epidemiology, Ichiro Kawachi and S.V. Subramanian found that impoverished individuals simply cannot lead healthy lives as easily as the wealthy. They are unable to secure adequate nutrition for their families, cannot pay utility bills to keep themselves warm during the winter or cold during heat waves, and lack sufficient housing.

Conversely, some researchers have criticised the view that economic inequality causes worse health outcomes, with some studies failing to confirm the relationship or finding that the relationship was more complicated due to issues of determining causality, inadequate data, correlation versus causation or confounding variables (for example, more unequal countries tend to be economically poorer).Snowdon, Christopher. The spirit level delusion: fact-checking the left's new theory of everything. Little Dice, 2010.Eckersley, Richard. "Beyond inequality: Acknowledging the complexity of social determinants of health." Social Science & Medicine 147 (2015): 121-125.Antony, Jürgen, and Torben Klarl. "Estimating the income inequality-health relationship for the United States between 1941 and 2015: Will the relevant frequencies please stand up?." The Journal of the Economics of Ageing 17 (2020): 100275.Leigh, Andrew, Christopher Jencks, and Timothy M. Smeeding. "Health and economic inequality." The Oxford handbook of economic inequality (2009): 384-405.Kim, Ki‐tae. "Income inequality, welfare regimes and aggregate health: Review of reviews." International Journal of Social Welfare 28, no. 1 (2019): 31-43.

Education

Social cohesion

Research has shown an inverse link between income inequality and social cohesion. In more equal societies, people are much more likely to trust each other, measures of social capital (the benefits of goodwill, fellowship, mutual sympathy and social connectedness among groups who make up a social units) suggest greater community involvement, and homicide rates are consistently lower.

Comparing results from the question "would others take advantage of you if they got the chance?" in U.S General Social Survey and statistics on income inequality, Eric Uslaner and Mitchell Brown found there is a high correlation between the amount of trust in society and the amount of income equality.Inequality Trust and Political Engagement Eric Uslaner and Mitchell Brown, 2002 A 2008 article by Andersen and Fetner also found a strong relationship between economic inequality within and across countries and tolerance for 35 democracies.

In two studies Robert Putnam established links between social capital and economic inequality. His most important studiesMaking Democracy Work: Civic Traditions in Modern Italy (Putnam, Leonardi, and Nanetti, 1993)Robert Putnam, Bowling Alone: The Collapse and Revival of American Community 2000 established these links in both the United States and in Italy. His explanation for this relationship is that

Community and equality are mutually reinforcing... Social capital and economic inequality moved in tandem through most of the twentieth century. In terms of the distribution of wealth and income, America in the 1950s and 1960s was more egalitarian than it had been in more than a century... [T]hose same decades were also the high point of social connectedness and civic engagement. Record highs in equality and social capital coincided. Conversely, the last third of the twentieth century was a time of growing inequality and eroding social capital... The timing of the two trends is striking: somewhere around 1965–70 America reversed course and started becoming both less just economically and less well connected socially and politically.Robert Putnam, Bowling Alone: The Collapse and Revival of American Community, 2000, p. 359.

Albrekt Larsen has advanced this explanation by a comparative study of how trust increased in Denmark and Sweden in the latter part of the 20th century while it decreased in the US and UK. It is argued that inequality levels influence how citizens imagine the trustworthiness of fellow citizens. In this model social trust is not about relations to people you meet (as in Putnam's model) but about people you imagine.Albrekt Larsen, Christian (2013). The Rise and Fall of Social Cohesion: The Construction and De-construction of Social Trust in the US, UK, Sweden and Denmark. Oxford: Oxford University Press

The economist Joseph Stiglitz has argued that economic inequality has led to distrust of business and government.

Crime Studies show mixed results on crime correlates with inequality. Daly et al. 2001 estimated that about half of all variation in homicide rates among U.S. states and Canadian provinces can be accounted for by differences in the amount of inequality in each province or state.Income inequality and homicide rates in Canada and The United Fajnzylber et al. (2002) found a similar relationship worldwide. A 2016 study, controlling for different factors than previous studies, challenges the aforementioned findings. The study finds "little evidence of a significant empirical link between overall inequality and crime", and that "the previously reported positive correlation between violent crime and economic inequality is largely driven by economic segregation across neighborhoods instead of within-neighborhood inequality". A 2020 study found that in Europe, the inequality-crime correlation was present but weak (0.10), explaining less than 3% of the variance in crimeKim, Bitna, Chunghyeon Seo, and Young-Oh Hong. "A Systematic Review and Meta-analysis of Income Inequality and Crime in Europe: Do Places Matter?." European Journal on Criminal Policy and Research (2020): 1-24. with a similar finding occurring for the United States,Atems, Bebonchu. "Identifying the Dynamic Effects of Income Inequality on Crime." Oxford Bulletin of Economics and Statistics (2020). while another 2019 study argued that the effect of inequality on property crime was nearly zero.Corvalana, Alejandro, and Matteo Pazzonab. "Does Inequality Really Increase Crime? Theory and Evidence." In Technical Report. 2019. A 2024 study found no or little association between crime and inequality.

Redistribution and welfare