The contagious disease of inequality

Improvements in child wellbeing in rich societies may depend more on reductions in inequality than on further economic growth. This was the result of a study on the relationship between child well being, income and inequality. The study was published in the British Medical Journal and involved a cross-national comparison of 23 rich countries and cross-state comparisons within the United States.

These results do no necessarily hold for poorer countries:
...when international analyses include data for poorer countries, it is clear that among them, absolute material standards remain important for child wellbeing.

The explanation given by the authors for the link between inequality and child wellbeing is that children are aware of differences in status:

We have suggested elsewhere that greater inequality leads to increased competition and anxiety regarding social status. But are children sufficiently aware of differences in status to make the third hypothesis plausible? Research has found that before the end of primary school children are fully conscious of class differences: they can rank occupations hierarchically and are able to categorise people socially by outward indicators such as clothing, houses, and cars. There is also evidence to show how children’s performance is affected by status differentiation. For example, although tests showed that 11-12 year old Indian children from high and low castes could solve mazes equally well before they knew each other’s caste, lower caste children did much less well as soon as caste was declared. Similar effects were apparent when black and white American high school students were given cognitive tests. When told the tests were to measure ability, the black students did much less well than when they were told they were not tests of ability. White students did equally well under both conditions. Other experiments have shown how the creation of artificial differences in status can lead to differences in behaviour and performance.

If people are poor provide the goodies, if they become richer ask them to resist the temptation to watch the neighbours.