This post is the executive summary of a full-length report by the same name.
In their book “The Spirit Level: Why Equality is Better for Everyone” Richard Wilkinson and Kate Pickett argue that social well-being – measured using a range of widely accepted indicators – varies a lot between advanced industrial countries. They show that there is little relationship between the level of GDP per capita within a country and social well-being. However, they find that there is a strong positive relationship between a low level of income inequality and well-being; in other words, they find that societies with a high degree of income equality among its members are generally happier and healthier than more unequal societies.
The indicators that Wilkinson and Pickett use to measure well-being are: life expectancy, student achievement, infant mortality, homicides, incarceration, teenage pregnancy, trust in others, social mobility, mental health, and obesity.
This report by the Broadbent Institute replicates Wilkinson and Pickett’s study for the Canadian provinces using data from Human Resources and Skills Development Canada’s ‘Indicators of Well-being’ website and Statistics Canada.
For each indicator, the provinces are ranked according to their performance as a percentage of the national average.Then, the provinces are ranked according to their overall performance.
Overall, the provinces share relatively similar well-being outcomes, with the exception of Manitoba and Saskatchewan, which perform poorly compared to the other provinces (Figure 1).
Figure 1: On the whole, most of the Canadian provinces share relatively similar well-being outcomes. Manitoba and Saskatchewan are outliers, performing comparatively poorly.
Variances and similarities in provincial well-being outcomes
There are many social, economic, environmental, cultural, and other factors that may explain variances and similarities in well-being outcomes among the Canadian provinces. Here, four potentially explanatory factors will be explored: 1) Provincial GDP per capita, 2) Levels of income inequality, 3) Outlier provinces, and 4) Provincial social spending and federal support.
1. Provincial GDP per capita
There is not a strong relationship between social well-being and provincial GDP per capita (income per person) in Canada. This finding accords with Wilkinson and Pickett’s findings. Some lower income provinces, notably PEI and Quebec, score high in terms of social well-being, while some higher income provinces, such as Saskatchewan and Alberta, rank near the bottom.
2. Income inequality
The measure of inequality used in this study is defined as the difference between the average incomes of the top 20% and the bottom 20% income groups in each province.
Do provinces with lower levels of income inequality perform better on the well-being outcomes than provinces with higher levels of inequality? Surprisingly, there is only a weak linkage between social well-being and the degree of income inequality within the Canadian provinces.
What might explain these findings? There may be a myriad of reasons for the weak relationship between income inequality and well-being within the provinces, but two key reasons are discussed below.
(i) The variation in income inequality levels between the provinces is generally modest
One reason for this weak linkage is that levels of income inequality do not differ a great deal between the provinces if one ignores the two outliers, PEI and BC, which are, respectively, the most equal and the most unequal province.
Inequality varies much more among the advanced industrial countries than it does among the remaining provinces, where the level of inequality varies in a narrow range of 90% to 112% of the national average.
(ii) The variation in well-being outcomes between most of the provinces is generally modest
Another reason for the weak linkage is that there is generally modest variation in outcomes between most of the provinces on most indicators. For example, life expectancy rates only vary between 98% and 102% of the national average among the provinces.
Again, there is consistently much less variation between provinces on the social outcomes than there is between the advanced industrial countries.
3. Outlier Provinces
Though there is fairly modest variation between most of the provinces on most indicators, there is a large range of provincial outcomes on some indicators, particularly homicide, incarceration, and teen pregnancy. This wide range can largely be explained by Manitoba and Saskatchewan, which perform very poorly on these indicators compared to the other provinces.
Manitoba and Saskatchewan’s poor performances on the well-being outcomes put them at the very bottom in the overall provincial rankings of social well-being.
These provinces’ poor performances are likely largely due to the fact that they have much higher than average Aboriginal populations; while Aboriginal people account for 4% of the total Canadian population, they represent 15% of Manitoba and Saskatchewan’s populations. The incarceration rate for Aboriginal persons is about ten times higher than the rate for non-Aboriginals, the homicide rate is seven times higher, and the teen pregnancy rate is up to six times higher. The infant mortality rate among Aboriginal groups ranges from about 1.7 to 4 times the rate for non-Aboriginals.
Clearly, policy is needed that will increase the opportunity for more equal social and health outcomes between Aboriginals and non-Aboriginals. This would have the supplementary effect of further equalizing the Canadian provinces’ performances on the well-being outcomes.
4. Provincial social spending and federal support
The relatively small variation in well-being outcomes between most of the provinces can largely be attributed to the fact that levels of provincial social spending per person do not differ a great deal. Social spending only varies between 90% (Ontario) and 118% of the national average (Newfoundland and Labrador).
GDP per capita varies a lot between the provinces, from 75% to 148% of the national average, and income inequality varies moderately from 76% to 134%. However, provincial social spending varies much less. This is because the federal government provides equalization payments to the poorer provinces, as well as equal per person transfers to support health and social services. This spending and support by the provincial and federal governments likely equalizes social well-being between the provinces to a significant degree.
There is generally modest variation in well-being outcomes between most of the provinces on most of the well-being indicators. Notable outliers are Manitoba and Saskatchewan, which perform poorly overall on the well-being outcomes compared to the other provinces.
While income inequality within Canada is an important problem, differences in well-being outcomes between the provinces cannot be explained by differing levels of income inequality among the provinces. Nor can differences in well-being outcomes be explained by differing levels of provincial GDP per capita. Rather, there are more dramatic differences between the Aboriginal and non-Aboriginal populations in terms of well-being outcomes - which influence the overall provincial rankings - than between the provinces.
Provincial social spending as well as federal equalization payments and per person transfers likely play an important role in helping to equalize well-being outcomes between the provinces, which otherwise may be negatively affected by large differences in provincial GDP per capita and income inequality levels.