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Angus Deaton is the Dwight D. Eisenhower Professor of Economics and International Affairs at Princeton, Emeritus, and the recipient of the 2015 Nobel Prize in Economics. He is the author of The Great Escape: Health, Wealth, and the Origins of Inequality and, with Anne Case, of Deaths of Despair and the Future of Capitalism. His most recent book is Economics in America: An Immigrant Economist Explores the Land of Inequality.
In this week’s conversation, Yascha Mounk and Angus Deaton discuss why he thinks the core predictor of economic and social outcomes in America is not primarily race or class, but one’s attainment of a four-year college degree; why America (and Scotland) are unique among wealthy, industrial nations for their increasing mortality rates; and how to best explain the growing sense of social dislocation that contributes to so-called “deaths of despair.”
The views expressed are those of the speakers, not those of Persuasion. The transcript and conversation have been condensed and lightly edited for clarity.
Yascha Mounk: It strikes me that one of the just really fundamental facts about the United States today is your finding that life expectancy overall for Americans is decreasing and that a lot of this seems to be driven by what you're calling “deaths of despair.”
What helps to explain why it is that, for centuries, life expectancy went up in the United States and now, suddenly, we're seeing this really quite striking aberration from that?
Angus Deaton: The “why” is always harder than the “what.” But “what” can take you a long way by itself. We don't really know why life expectancy improved so much for so long. But if you go into that literature, it's amazingly diverse and controversial. Was it nutrition? Was it drugs? My mother told me that the reason we all live longer was because doctors had invented these magic drugs and so on. We now know that that's not true. But we don't really know what it was, so it's not so puzzling if we have this turnaround now and we have some difficulty explaining why. A lot of what Anne [Case] and I have done is just to document this fact that there's three years in a row when overall life expectancy fell: you've obviously got what happened during COVID (which doesn't require a lot of explanation by itself) and also these horrible deaths of despair, which are suicides, drug overdoses, and alcoholism—a huge increase during the pandemic of deaths from alcoholism.
Suicides have always been a big clue in this story, because of Durkheim and the story that when society is really not working for people, that's when you begin to get suicides. Suicide is just an indicator that something is gone terribly wrong. But I think it’s getting almost no attention among policymakers and very little in the press that the increase in deaths during this period is almost entirely among people who don't have a four-year college degree. For the third of the popular adult population that has a four-year college degree, they're pretty much exempt from all these horrors. And in fact, if you look at life expectancy at age 25 for people with a college degree, it's like the best out of all the other rich countries in the world; it looks like Japan or Switzerland. What's pulling us all down—and making us, really, the sick man of all the rich countries—is this increasing mortality among, if you like, the working class, and I think that cuts across race. This is not a black–white issue, not a poor–rich issue, but an issue between people who have a college degree and people who don't.
There's something gone wrong with working class America. And it's not hard to list a bunch of things. Democracy is not working very well for them. The neoliberal consensus wasn't good for them. The share of profits in GDP is rising at the expense of working people. It's sort of like an old fashioned class war.
Mounk: Between the deaths of despair and this emphasis on the vast discrepancy between college educated and non-college educated Americans, there's a kind of implicit story that emerges, which is that this is about social and economic inclusion. It seems that, in America, there is this great risk of social anomie, and if you have a four-year college degree, you're likely protected from that.
Why is it that there are these deaths of despair, and why is it a bit concentrated among people who don't have those four-year college degrees?
Deaton: Well, there's a lot of stories out there. And the question is picking out the ones that make sense. One clue all along is that you're not getting these deaths of despair in other rich countries—except one, the one where I come from, which is Scotland, which has a death rate that's very similar. But it can't really be globalization or automation, because they have globalization in Germany, they have automation in France. One of the things that's a big deal here is that we don't have much of a safety net when these things come along. If you get deindustrialization, there's some protection in Europe; there's much less here, or it's much less complete. We also don't let drug companies sell heroin on the streets, essentially, which is what happened at the beginning of the opioid epidemic, where Purdue Pharma pushed OxyContin very hard and addicted a lot of people. And then when the doctors realized what they'd be doing, they backed away, and they were replaced by illegal drugs. But once the horse was out of the barn, it was very hard to stop it from running away.
That's been part of it. Alcohol has been very important to this thing, too. But if we're doing a Durkheim on this, what are the pillars of social support that didn't really help people? People have been drifting away from churches, that's much more rapid among people without a B.A. than it is with people with a B.A.—social networks that are very important and which economists have not been very good at writing about, whereas sociologists and others have seen this much more clearly, I think. Also, it used to be that Americans were famous, if they lost their job in one city, you would get on your bike or on your horse and go off to another more successful city—that is not happening to the same extent. Many people have family members who have jobs that make it very hard to move; successful cities have become incredibly expensive through NIMBYism. So it's actually very hard for people who've lost their job in one failing city to move somewhere else. There's also in economics a very rapidly growing literature on corporate misbehavior, you might say, in terms of monopsony, and firms holding wages down artificially. Lack of mobility makes that much easier to do.
There's a lot of worry about addiction. One of the things that drives me nuts is I can't watch a sports program on television anymore without being advertised to gamble. That's something that's been passed by state legislatures, over and over again, under pressure from the gambling industry. There are very smart people who are writing about addiction on social media, and so on. And then there's a line of work done by Jennifer Karas Montez and her collaborators in Syracuse about how state legislatures are passing laws, put together by corporate interests, which are typically very bad for or ignore the health of working class people. They're passing laws that prevent minimum wages rising, right to work laws, there are laws about guns. Jacob Grumbach has a book, Laboratories Against Democracy, which documents how some of that is happening. And so there seems to be just a lot of forces sort of ganging up on working class people in America and separating them often. Sometimes, you think of them as sheep waiting to be sheared by corporate interests.
Mounk: A lot of that is very convincing to me. I'm still struck by the remark you made a few minutes ago that this is happening in the United States, and it's happening in Scotland, and it's not happening in other places, and I guess I'm trying to understand how and why that is, and some of the political factors don't quite seem to explain that, right? If anything, it would seem that Scotland has more left wing governance than the rest of the United Kingdom. When I compare the United States to a place like Italy, you've had this tremendous economic stagnation in Italy for 30 years, very, very limited wages and opportunities for a big swath of a society, and governments deeply uninterested in the economic well-being of citizens, deeply corrupt and so on. And yet, Italy seems to have less of that kind of social dysfunction, and therefore leading to less of those kinds of deaths of despair.
What explains why some societies seem better able to hold together whatever basis of social connection and cooperation we need to avoid those kinds of deaths of despair, when other societies, like the United States and Scotland have had more trouble doing so?
Deaton: You’re asking a lot. You want the sort of equation which says, if I put all these things in, this many deaths of despair come out. And it doesn't, unfortunately, work that way. Let me say a word about Scotland, for a lot of the Scots would disagree with what you say, because, after all, the government in Edinburgh has limited powers. The overrulers are people who Scots don't like very much and who did not vote for. And there have been conservative governments in London for many, many years. There are very few conservative politicians elected in Scotland. Scotland is very angry about Brexit, for example, because they see themselves as European. And they hate the fact that this division has been enforced on them in a way that they wouldn't like. So you could argue that there's a real democratic deficit in Scotland that didn't exist in England.
I can't tell you about Italy. But there are other things here that are very different. We have a healthcare system that costs twice as much as the second most expensive health care system in the world. Switzerland is second; it spends about 12% of GDP. We're spending nearly 20% of GDP on health care, and so that money comes out of other things that would be available otherwise. We fund this through employer contributions, at least until you are old enough to qualify for Medicare—no other country does that. Your health insurance, my health insurance, and the janitor’s health insurance cost about the same, because you're talking about insuring a body, not an income. That means that it's like a flat tax on employment in business, and that depresses wages. It's one of the main reasons, we think, that America is different from other rich countries. We've destroyed good jobs. I mean, almost no large corporation in America anymore has food service workers, security service, cleaners, janitors, all the rest of it. Those have all been hired out. And if I were on the far right, I would argue they've all been hired out to people who are hiring illegal immigrants under the counter. It's certainly been a huge force in destroying good jobs for working class Americans. This is one of the big things they don't have elsewhere in Europe. They also don't have opioid epidemics, because they don't let pharma companies push these things out in the street.
Mounk: That seems like a convincing explanation to me. What's the case for why the educational disparity is something that stands at the core of this? And what explains why that particular social distinction, a four-year degree, is so economically and culturally salient in the United States?
Deaton: So once again, you say “why,” and I say “what.”
I grew up in Britain, Tony Atkinson was one of my heroes. I spent a lot of my time worrying about Gini coefficients, the distribution of income, the quantiles and all the rest of it. And so what has changed our mind is the data. When we look at the data, it's this educational qualification, so we're very much on board with stories like Michael Sandel’s: a college degree has become a mark of status, the marker of an overclass as opposed to the underclass.
Another thing that's very important for us—we had this paper a year or two ago, in the proceedings of the National Academy of Sciences, looking at race and education. What's happened is that black mortality is higher than white mortality in the United States, and always has been, as far back as the data go. Up until COVID, there was quite a bit of convergence, with the black mortality falling faster than white mortality, partly because a lot of white mortality was going up. But they were converging. But if you look within education, the amazing thing is that blacks with a B.A. have worse mortality than whites with a B.A., but they're very close. And blacks without a B.A. look like whites without a B.A. And so that split, where education within blacks used to not make any difference (there's a belief out there that education doesn't do anything for blacks; that's a very outdated perspective). There's now a huge gap within the black community between college and non-college. And I think this is showing up in politics, too; that less-educated African Americans are now looking to the Republican Party and are looking with some dissatisfaction at this Democratic alliance that has come between educated whites and educated blacks.
Europe doesn't have this sharp cut-off between college and non-college in the way that we have in the United States. In Britain, we have a group of people we work with, they're looking at college versus non-college, and looking at the death rates there, and the first thing we realized on day one is this college versus non-college is not the right split-off, because there are qualifications at all sorts of levels. And these qualifications qualify you for different sorts of jobs. In Germany, for instance, you talk to people like us, college professors, they have kids, and this kid might have decided, “Well, I'm not going to go to college, I'm going to go and do an apprenticeship or something.” There's a much richer array of educational qualifications. And it's always been frustrating when you're looking at the data where you don't have this clean college, non-college cut-off. But in some ways, that's a really good thing, because other countries have not set themselves up for the status divide along the four-year college degree.
Mounk: One obvious thought that I had as you were talking about is, if in Britain and Germany, there's this great variety of educational offerings and no steep fall-off—where you either go to this four-year college or you end up being locked out of that overclass that ends up being protected against all kinds of social ills—then, perhaps in America, we should create more of those intermediate qualifications and institutions and so on. But I suppose that depends on whether or not people at the lower end of educational achievement, within a four-year category, are protected in various ways or not.
If one of the problems is this really steep divide between the educational overclass and everybody else in the United States, how should we think about remedying that?
Deaton: I'm going to be very speculative now because I don't know the answer to that question. But Anne and I don't think this is education that is causal here. Getting everybody into college—maybe that would be a good thing, maybe it wouldn't be. But I don't think it would solve this problem. And a lot of people think that what's happening here is in the hands of employers, that they're using the B.A. as a cutoff, instead of using actual qualifications. And some people argue that, when hiring moved onto the internet, there's a box: do you have a B.A. or not? And if you don't check that box, you're out. And it used to be that if you advertise the job in your locality, you get a couple of hundred people. Now you get 200,000 people. So you need filters, and people are using the B.A. as a filter.
I remember talking to someone at Google and asking, “Do you have any people there that don't have a B.A. who work for Google anymore? You've got rid of your transport staff, your cooking staff.” And they say, “Oh, yeah, we have lots of people without B.A.s.” Who are they? “Well, they're genius programmers who we hire out of high school.” Maybe that's a model that we could do elsewhere, which is there's lots of talented kids who are talented in lots of ways which could be used in the labor market, and we seem to have reduced it to this cut-off, like a B.A. teaches you how to fly. And you can't fly an airplane unless you've trained to be a pilot. This is a B.A. that seems to be an arbitrary social cut-off. And that should be easier to undo if employers realize they're losing a lot of talented people.
Mounk: So just to understand what you're saying here, it's not about what you learn in the process of the education; it’s really about the degree that it gives you. So, it's causal in the sense that having the certificate is causal, but it's not the sort of educational experience itself that is causal.
Deaton: I try to avoid using the word “causal” at all costs, because I spent a lot of time with philosophers and other people who think hard about causality. And social scientists are terrible at this. Because causality is really complicated. There's lots of things going on here, and you can label almost anything causal at some point. But it doesn't really help you to understand what's going on. But we don't think it's selection. And I think the literature on deaths of despair and other things suggests that selection into education has not been a big deal. And, also, this selection can’t really help explain the gaps between people, because the more people go to college, that takes away healthy people from the bottom, making the bottom group worse off. It also imports less healthy people into the top group making them less well off, too.
There’s a number of papers in both the social and economic literature suggesting that selection is not really a big deal here. It's more like labeling as credentialing, or something, which is an old idea that's been around: people are interpreting it as a signal, but it's not a very good signal.
Mounk: The idea, for example, that people like Governor Shapiro in Pennsylvania had, of saying we're going to stop, as a public employer, demanding B.A. degrees, and we're going to encourage other kinds of employers to put less emphasis on that—do you think that could potentially make a real difference?
Deaton: Yes. I think it would also make a huge difference if we could reduce the price of healthcare so that we don’t have this huge tax on employment. Also, I’m very much in favor of trying to bring some jobs back here.
Mounk: With the cost of healthcare, I'm sort of struck by the way in which people never talk about one driver of health costs (and I know that it's not the main driver, but it does seem to be significant) which is simply the wages of doctors, right? When I compare what close friends of mine in Italy who are doctors make, to what an average doctor makes in the United States, it is just a giant difference. And at some basic level, if you need healthcare, you need the time of doctors and other medical professionals, and if they earn not twice as much as you (as might be the case in a place like Italy), but ten or twenty times as much as you (as is often going to be the case in United States), that is just very quickly going to be unaffordable.
When we're thinking about how to rein in the costs of healthcare, is it ever going to be possible without dealing with some of those wage problems which are always outside of the discussion, even when very progressive economists talk about single-payer health care or Medicare For All, and so on? Is there the political will—particularly in the kind of political class in America which is all highly-educated and has many friends who have invested their time into medical school and so on—to actually take on that knotty part of the problem?
Deaton: It's a really good question. There's a recent National Bureau of Economic Research working paper, which you may have heard about (The Washington Post wrote it up). And they actually discovered the salaries of every physician in America, and you can see them all listed there. And what you say is exactly right. They make enormous sums of money compared to doctors from other countries. I haven't read it all in detail (it's quite recent), but it's quite apologetic, though. It says this is what lawyers earn, too, you know, this is how much we have to pay doctors, it takes them a long time to go to school, and all the rest of it—all of which is true. And doctors get paid relatively a lot in most countries. So even if you go to Sweden, they're relatively well paid. One of the things though, that I think is very important here is the AMA is allowed to control access to medical school. If that were opened up—it's very interesting, if you think of workers in car factories, they had to face competition from abroad, they had to face importation of Japanese and Italian cars, and Mercedes—these doctors don't put up with any of that.
There’s another part of the story, which is that this educated elite is very much better at controlling its own environment than ordinary working class people are. And some of that is because working class people have lost political power. There are no unions anymore. There's very little representation in Washington. And Google spends more than all of the unions put together in lobbying, so you've got a very stacked system in favor of this educated elite. One educated elite that's not so protected are academics (my department in Cambridge has about 30 different countries of birth in there), but there's much more protection against foreigners. That would be one thing we could do. It's interesting that the AMA is very left wing when it comes to the social causes of health, but it's not left wing when it comes to working on doctor salaries at all. I think that may change, partly because there's now a very large number of doctors who are not paid all that much. They're a lot more women in that profession than there used to be. I think the body of doctors is moving further towards more progressive solutions to that. But hospitals are the big players there. If you want to open a hospital in New Jersey, you have to get a certificate of need from the state, and any other hospital could block the construction of a new hospital. And every time hospitals merge, the prices go up. So there's a lot of abuse going on there.
One of the things I've learned over the years, coming back to a more general question, is that there are many, many dimensions of inequality. And I think at the fundamental level, this idea of relational inequality of people being treated differently, of people being second-class, as opposed to first-class citizens, is ultimately more important than income or wealth inequality. This thing that we've been talking about, with people without a B.A. becoming second-class citizens, is an example of relational inequality gotten out of hand. I see that as very, very important, because these people have been deprived of political power. There's a sort of intellectual elite that has been running the country for a really long time and ignoring the demands of those people. And the danger is, in the end, that they're going to come for us with pitchforks with an orange-headed leader at their head. And that's a very dangerous situation. A lot of what I write about, towards the end of the book, is I think economists have gotten a lot of things wrong. They've been too persuaded by libertarians, and by the Chicago School in particular. They've overemphasized what markets can do and ignored too much what markets cannot do. To some extent, my profession is at fault there. That’s changed a little bit now. But it's changing slowly.
Mounk: You describe, in your new book, coming to the United States in the 1980s, and both your love for America and your disappointment with some of the changes in the country.
Do you feel that, on this crucial count of relational equality, America was different when you arrived than it is now, and, if so, what's the nature of that difference? If what really matters is relational equality, and one of the ills of this moment is that we have a new kind of inequality, what is it that made us incapable of sustaining that relational equality that, I suppose, we must have once had?
Deaton: I think we're much more divided than we were in 1980. I visited for a year in 1979. I was around when Reagan was getting elected. That period, from 1980 to now, is a period in which there really was redistribution, not just of income (though, that was very strong in the first decade of that period) but a redistribution of political and relational power, so that the middle class, the blue color aristocracy (which I guess, vanished a little bit before that) felt the final nail in that coffin, to the point where ordinary working people really were being marginalized all the way. And this went on through the Clinton and the Obama administrations, too. Gary Gensler calls it the “neoliberal age.” It was the “middle way” in Britain. There was this sense that we could trust markets. But I think it was George Orwell who said the problem with competition is that someone wins. And I think that the sort of competition in markets, which delivered a lot of growth, also led to corporate winning, and working people significantly being left behind.
Mounk: These kinds of relational questions are often at the heart of things that otherwise are difficult to quite make sense of. I'm always struck by the conviction that many of my friends have in the United States, for example, that teachers make extremely little money. When you look at a comparison of earnings of teachers across the OECD, that simply turns out to be wrong: American teachers earn among the most in the OECD. But where the problem lies, I think, is a lack of relational equality to their imagined perceived peer group: in the United States, you might make more money than the teacher does in France or Germany (the data suggests that you would) but you are going to make much less money than your friend who goes on to become a doctor or lawyer. And so you feel that lack of relational equality, very, very deeply. But the question of how to build more relational equality is, of course, hard, because while it is in part about money, it's really about much more than that. And it's particularly hard to see how a political party that has effectively become the party of the highly educated (and, often, the affluent) is going to be a historical motor for that equality, right? We have very interesting data from the United States, but also from other countries around the world, that most left-wing parties now have gone from being the party of people who are likely to have less formal education, and who earn less, to often being a party of people who have more education and who earn more.
So, what would a left-wing politics that actually fights for a society that facilitates relational equality look like?
Deaton: I don't know. I wish I had the answer to that. It's always the weakest part of the arguments we make about despair and all this bad stuff. So what do you do about it? And in some sense, I resist that, because we can document it, we can talk about it, and we can write about it. And I think that has an effect on the debate. And I think that's important. But it's not for us to mention the future, because the future will be determined by these forces that are going on in American politics today. You've got this very strange Republican Party which is a coalition between populists, on the one hand, and the corporate interests that are causing the populism on the other. I don't know how that can be stable. And you've got this elite, which is sort of a coalition of educated minorities and educated white people, who are not paying any attention, and who mouth all these things about inequality and, in fact, inequality is a sort of escape for them, because they can worry about poverty and income inequality and ignore the relational inequality that they're very much a part of.
It's very hard to see what the future is going to look like. But I'm encouraged. I think there's a ferment in ideas going on at the same time as there is a ferment in politics. I think that a lot of economists are really thinking about the role of markets, rethinking things like industrial or place-based policy; they're wondering about whether we got trade right, especially during hyperglobalization. There's a real concern about whether we give the banks too much power to do whatever they want to do. And I think that's ultimately to the good. That intellectual work that's being done will help lay the groundwork for people who are actually going to change things. But I don't think you and I are the people who are going to change them.
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