Predatory Lending

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 studies 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.
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.
The economist Joseph Stiglitz has argued that economic inequality has led to distrust of
business and government.
Crime
Crime rate has also been shown to be correlated with inequality in society. Most studies
looking into the relationship have concentrated on homicides – since homicides are
almost identically defined across all nations and jurisdictions. There have been over fifty
studies showing tendencies for violence to be more common in societies where income
differences are larger. Research has been conducted comparing developed countries
with undeveloped countries, as well as studying areas within countries. Daly et al. 2001
found that among U.S. states and Canadian provinces there is a tenfold difference in
homicide rates related to inequality. They estimated that about half of all variation in
homicide rates can be accounted for by differences in the amount of inequality in each
province or state. Fajnzylber et al. (2002) found a similar relationship worldwide. Among
comments in academic literature on the relationship between homicides and inequality
are:
The most consistent finding in cross-national research on homicides has been
that of a positive association between income inequality and homicides.
Economic inequality is positively and significantly related to rates of homicide
despite an extensive list of conceptually relevant controls. The fact that this
relationship is found with the most recent data and using a different measure of
Page 54 of 181