iv Latest data available from the World Wealth and Income Database suggest income shares of the top 1% of: 18% US (2015); 13% UK (2012); 8% Australia (2013); 8% Canada (2013); 10% Ireland (2009). See also: Atkinson, A, Piketty, T, and Saez, E, 2011, “Top Incomes in the Long Run of History”, Journal of Economic Literature, 49(1), 2011, 3-71. v Saez, E and Zuchman, G (2015), “Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data”. vi Milanovic, B. (2016), Global Inequality: A New Approach for the Age of Globalization, Harvard. vii As my colleague Ben Broadbent has pointed out, this explains why rising real house prices did not result in large increases in the Gini measure of wealth inequality: compared to financial assets, housing is more evenly distributed among the population, so rising house prices tend to benefit the median in the wealth distribution. See Broadbent, B (2016), “The distributional implications of low structural interest rates and some remarks about monetary policy trade-offs”, speech at the Society of Business Economists Annual Conference, November. viii Credit Suisse Research Institute (2014), Global Wealth Databook 2014, London. See also Alvaredo, F., Atkinson, A. and Morelli, S. (2016), “The Challenge of Measuring UK Wealth Inequality in the 2000s”, Fiscal Studies, 37(1). ix Gardiner, L. (2016), “Stagnation Generation: the case for renewing the intergenerational contract”, http://www.resolutionfoundation.org/publications/stagnation-generation-the-case-for-renewing-the-intergenerational-contract x Hood, A (2016), “The outlook for living standards”, IFS post-Autumn Statement 2016 briefing, Institute for Fiscal Studies.

These findings are consistent with a broad school of psychological research that shows that feelings of control and opportunity are important determinants of mental health and happiness. The combination of these effects can mean that, even as GDP grows, if the gap between rich and poor widens, aggregate happiness can fall and mental health ailments rise. xiii E.g. Alesina, A., Di Tella, R. and MacCulloch, R. (2004), “Inequality and happiness: are Europeans and Americans different?”, Journal of Public Economics, 88; Rodriguez-Pose, A. and von Berlepsch, V. (2012) "Social Capital and Individual Happiness in Europe," Bruges European Economic Research Papers 25, European Economic Studies Department, College of Europe. xiv E.g. Bhagwati, J. (2011), “Why free trade matters”, Project Syndicate, June 23. xv In neoclassical models, free trade is Pareto Optimal in principle – in that the aggregate gains are sufficient to compensate those that lose out while preserving gains for the winners. This typically means some form of redistribution of the gains from trade is needed to achieve this outcome. This is the Kaldor-Hicks compensation principle. It is an open question, however, whether redistribution of this kind actually takes place in practice and, indeed, whether it is itself costless, as the Kaldor-Hicks principle assumes. xvi Stolper, W. F.; Samuelson, Paul A. (1941). "Protection and real wages". The Review of Economic Studies, 9 (1): 58–73, November. xvii Pew Research Center (2014).