When the gap is great between rich and poor, people are more prone to grow up with an anti-social lifestyle - a drug user, a criminal, less educated, obese,or pregnant as a teenager etc.
'The spirit level: Why more equal societies almost always do better', by British researchers Richard Wilkinson and Kate Pickett, tracks income inequality against social indicators including health, education and crime, reports the New Zealand Herald.
'The Spirit Level' shows Japan as the most equal country in terms of the gap between the richest 20 per cent and the poorest 20 per cent. The US and Singapore bring up the rear.
New Zealand used to rank among the best in the world in terms of income inequality, but the book has ranked it 17th in a list of 23 developed countries; less equal than Italy, Israel and Greece but more equal than Australia and the UK.
Treasury senior analyst Ben Gleisner said that income inequality had risen sharply from the mid-80s to the mid-90s, which coincided with the Rogernomics years of neo-liberal economic policies. The trend has reversed slightly since 2000.
"In some cases there are strong positive relationships, and in some cases it's negative. It's not as universal as Wilkinson's thesis suggested, although we have to be cautious," said Ben.
Philippa Howden-Chapman, from Otago University, showed that NZ's infant mortality rate before the mid-1980s was comparable to Denmark, but was now almost twice as high as Denmark.
"The period when our income inequality started to rise very rapidly, there's a strong association with the way this terrible disease [meningococcal disease] took off in New Zealand. It should not occur in a developed country," she said.
She suggested that the rise was related to families becoming poorer and moving into smaller and more crowded housing.
Forum chair Jonathan Boston, the director of Victoria University's Institute of Policy Studies, said there was enough evidence to support the general thesis in The Spirit Level.
"My personal view is that we can have some confidence that more equal societies - other things being equal - have better social outcomes across a range of measures. It may not be absolutely conclusive, but I think it's reasonably persuasive," he said.