Economists Case, Deaton discuss ‘inequality, deaths of despair, and future of capitalism’

The lack of a college education and good jobs are among the key factors driving an increase in despair and early deaths, particularly among white, working-class Americans, economics professors Anne Case and Nobel Laureate Sir Angus Deaton told a full Fowler Hall.

Sir Angus Deaton (right) and Anne Case Case and Deaton, both professors of economics emeriti at Princeton University, on March 26 presented their lecture “Inequality, Deaths of Despair, and the Future of Capitalism,” based on their research, as part of Purdue University’s Ideas Festival, the centerpiece of the University’s Giant Leaps Sesquicentennial Campaign.

Using an array of charts with graphics, Case, the Alexander Stewart 1886 Professor of Economics and Public Affairs, Emerita at Princeton, explained the research the couple has done. After mortality rates declined through most of the 20th century, she said that began to change during the 1990s. And life expectancy in the United States has fallen for three consecutive years, 2015-2017, which had not happened since the flu epidemic in 1918.

“It’s not inequality in general that is causing rising death rates (among working-class white Americans), but the way the economy works today, which is unfair to many. It’s holding down real wages in the U.S., especially for those less educated and who do not have bachelor’s degrees,” she said. “And people also are getting away from religion and not attending church.”

Drug use, alcohol and suicide are the other part of the story, Case said.

“Three things went up significantly in the last several years — liver disease, drug overdoses and suicides. The crisis is really acute for people without bachelor’s degrees. In the U.S., suicide rates for whites is higher than in Western Europe and moving close to the rates of the former Soviet Union states,” she said.

Sir Angus Deaton (right) and Anne Case

“This is happening to both men and women … and it’s happening everywhere — rural and urban areas. And underneath the body counts, we find a sea of pain and poor mental health among people,” Case said.

Deaton, who received a Nobel Prize in economics in 2015 for his research on human welfare, then discussed the loss of jobs and how that leads to despair.

“There has been a long-term decline in workforce participation by men, especially men without a BA,” said Deaton, the Dwight D. Eisenhower Professor of Economics and International Affairs, Emeritus at Princeton’s Woodrow Wilson School. “Women were rising (in the workforce) until about 2000 and then they started declining. Once again, it’s people without a BA who don’t have good jobs. They’re dropping out of the labor force, and their wages are going down. They’re losing good jobs and getting jobs that aren’t that good.”

That leads to other issues, according to Deaton.

“The number of people with less than a BA who are not getting married is going up steadily. They’re partnering up, but they’re not getting married,” Deaton said. “And these partnerships don’t last. They end, and the people go on to other partnerships but they have kids. A majority of white moms without a BA have had a child out of wedlock. Men in their 50s may have kids, but they don’t have a bond with their families. You can see how that could make them unhappy.

“They’re losing their jobs, they’re not getting married, they’re losing their families and they’re losing religion. It’s a steady, cumulative distress for those with BAs.”

Deaton cited other factors holding down wages for working-class people, both blacks and whites, including:

  • Loss of unions.
  • Non-compete clauses.
  • Rising health insurance premiums, which many workers do not realize keep wages from rising.
  • Businesses outsourcing lower-skilled jobs, such as janitorial work.
  • Globalization and technology changes, although there are technological advances in Europe, but their social net provides better support for workers.

Deaton also discussed what has happened to black Americans.

“For a very long time, the black mortality rate was enormously higher than whites. Black mortality rates are now dropping faster (than whites), but their mortality rate is still higher,” he said. “In many respects, we agree that what’s happening now to white Americans happened to black Americans in the 1970s. Many of the same arguments made about black culture going back to the Moynihan Report in 1965 are now happening to white people.”

The Moynihan Report is the common name for the U.S. Department of Labor report, “The Negro Family: The Case for National Action.” Written by the late Daniel Patrick Moynihan, a sociologist and then an assistant secretary at the department who eventually became a prominent U.S. senator, the report examined black poverty and its roots. It called for more government action to improve the economic prospects of black families.

So, what happens now?

Deaton said things that could be done to remedy this include providing different kinds of education to give people better and more job skills, and finding a way for labor unions to gain a voice at the table. He said labor unions used to do a lot for workers, both economically and socially.

Kevin J. Mumford, associate professor of economics and director of the Purdue University Research Center in Economics, said Deaton and Case make a convincing argument.

”Case and Deaton’s analysis of U.S. death certificates clearly shows that the risk of suicide, drug overdose and death from alcohol-related liver diseases has increased for the working class over the past 50 years,” Mumford said. “In terms of a policy response, I found their call for reforms that decrease the unfairness of our economic system to be convincing.

“They argued that policies which reduce inequality are not always the same as those that reduce unfairness as many market processes that generate inequality are widely viewed as fair. But taxpayer bailouts, rising health care costs, regulatory capture, monopolies, monopsonies and government corruption are viewed as unfair and may lead to discouragement and disengagement. I believe their claim that our economic system has become less fair and is causing many working-class Americans to lose hope.”

The couple’s presentation was an eye-opener for Shauna Kelly, a second-year professional student in the College of Pharmacy from St. John, Indiana.

“I was surprised at the results that they had and at how separate it is for those with BAs and those without them,” Kelly said. “Given the profession that I’m going into, it gave me a lot to think about. I thought what they said about the drug problem was interesting and how people are not looking to religion. I like the way that they looked at it from all aspects and as a whole, not just one single aspect.”

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