|Charlie Woods is EDAS's Policy and Practice|
sub-group Chair and Director of the
Scottish Universities Insight Institute
“…there are many “lost Einsteins”…especially among women, minorities, and children from low-income families.”
The contribution of more inclusive and equitable development to wellbeing and social justice is well recognised. Perhaps the impact on economic progress is less well appreciated. Indeed it is sometimes assumed there is a trade-off between strong economic performance and equality, sometimes referred to as efficiency v equity
There is an increasing amount of evidence that there need not be a trade-off, indeed there can be considerable synergy between the two. For example, secure, fair employment, where employees having a stake in the business, can help boost innovation and productivity. Daron Acemoglu and James Robinson
have argued this type of relationship is at the heart of economic development processes and distinguish between the long term performance of ‘inclusive’ and ‘extractive’ economies.
The IMF have highlighted that inequality can be damaging to economic performance. A recent bookby Heather Boushey of the Washington Centre for Equitable Growth focusses on how inequality ‘obstructs, subverts and distorts’ economic growth. For example, as inequality lowers aggregate demand because the better off have a lower propensity consume and save more than those at the bottom end of the income distribution. Inequality also forces the less well off into debt to finance consumption and can help make the economy more precarious and less resilient. She also cites a relatively recent study by Alex Bell and others, that adds a further interesting dimension to this issue. By analysing
data from patent records in the US and linking them to tax records, they found that children’s chances of becoming inventors are heavily influenced by characteristics at birth, such as their race, gender, and parents’ socioeconomic class. Children from families in the top 1% of income were 10 times more likely to become inventors as those from below-median income families.
Even more tellingly they found that these gaps persisted even among children who performed similarly in maths tests in early childhood - maths ability was found to be highly predictive of innovation success in later life. This suggests that there is likely to be significant innovative potential being stifled through inequality and it led them to coin the term ‘lost Einsteins’ to capture this waste.
It is further evidence of the need to see increased equality not just as an important goal to improve wellbeing and social justice, but as a contributor to more innovation, higher productivity and better economic performance.