Revisiting the Spirit-Level Theory: It's Competition, Not Inequality

The Spirit Level Theory by Wilkinson and Pickett (2008) explains differences in social problems among rich societies by levels of income inequality. According to this theory, inequality plays out negatively for everybody because it creates widespread status anxiety - a psychosocial response to an individual’s (low) status in society.

Spirit-Level theory has been rightfully criticized for focusing too much on income inequality, ignoring other contextual conditions as potential triggers of status anxiety. Our article will therefore focus on this first part of the Spirit-Level equation: linking structural causes to status anxiety.

As a first step we review the relationship between various contextual inequalities, country affluence, and status anxiety. In a second step we broaden the Spirit-Level framework further by examining our alternative hypothesis that status anxieties are driven by how competitive societies are organized. We present two different approaches to measure this competition orientation, Selfish Capitalism (James, 2009), which emphasizes the organization of the economy and labor relations, and the Experience Society (Schulze, 1992), which emphasizes the spheres of consumption and leisure (as a mirror-image of competition).

We use data from the 2011/12 European Quality of Life Survey on 34 countries comprising more than 40,000 individuals. Applying a two-level-design we examine direct and indirect effects of the four main macro indicators on individual status anxiety. Our results clearly indicate that status anxieties are not “automatically” caused by inequality, but rather by a strong societal emphasis on competition: the more a society resembles an Experience Society, the less citizens are plagued by status anxiety.