The latest figures show that the world’s richest 1% hold more than twice as much wealth as about seven billion people combined. Or, the top 1% captures 45% of global wealth, while the bottom 50% makes due with only about 1%. These somewhat abstract statistics can be understood as follows: while most resources and assets are concentrated in the hands of a relatively small group, the vastly bigger proportion of the population lacks the resources to consume and access opportunities for entrepreneurship, higher education, quality health care and more.

Hidden in these numbers are a set of dimensions research has further uncovered: women are disproportionately affected, racial dynamics are at play, there are significant geographical differences, and events such as the global pandemic or environmental changes have deepened levels of poverty and inequality.

What drives the divide?

The complexity of the issue derives from having multiple interrelated causes fuelling each other. Limited income, for example, influences access to quality education, housing and health care; resulting ill health, in turn, can limit lower-income people’s capacity for entrepreneurship.

The various drivers perpetuate one another, resulting in a vicious cycle of exclusion and downward development if there are no systematic and purposeful interventions to turn the tide. When all doors get closed from the outside, how can a person open them up from within? Why should we all be concerned? In today’s volatile world, it feels as if many other topics – wars, migration streams, climate change – are more urgent because their effects occur immediately.

However, when taking a closer look at the events leaving our world in turmoil, wealth inequality underlies them all. When resources to build up a life for oneself are so concentrated among a small proportion of the population, it leaves a large number of people excluded. Such significant imbalance leads to a sense of resentment and disillusionment. Social cohesion and trust within a society diminishes. Young people frequently report feeling entirely invisible in a system that is not structured to enable moving upward. Excluding a large part of the population impedes economic growth as their opportunity to participate in the labour market and the economy is significantly limited. It reduces consumer demand, which results in reduced possibilities to produce.

Research has revealed that countries with higher levels of inequality face worse levels of health and emotional and physical well-being across all strata of society. The increased levels of unrest lead to heightened levels of stress, insecurity and instability, affecting not only those who cannot afford health care but also those who can. Excessive wealth inequality and its consequences negatively impact a society’s safety and entire well-being. The possibility to consume and invest among the majority of the population is limited, which causes difficulties in starting up and maintaining successful businesses or initiating entrepreneurship. Combining this knowledge with the fact that high levels of inequality can lead to social unrest and potential instability, it becomes evident how difficult it can be to find investors with enough trust to invest in such seemingly unstable environments.

Levers heightening or mitigating wealth inequality

While academia has been able to decipher effective methods to reduce inequality, there is no one-size-fits-all solution nor a unified opinion about what to focus on first for maximum impact. In countries where structural forces have entrenched societal inequality, it is essential to consider how to undo such unequal structures and create a level playing field. Redistributive policies – including welfare policies, access to quality education and financial services, and housing or health care policies – reciprocally facilitate more just opportunities.

Some argue that access to quality education is the most urgent factor as it is foundational for anyone to break the cycle of poverty. To others, such an approach overlooks several other aspects – such as decent housing or health – that significantly affect one’s success in education. Additionally, financial services are critical to access credit or saving tools to protect oneself from new poverty shocks. It is necessary to compile more data and experience from the field to target interventions more precisely in specific locations.

Quality education as the bedrock

Education, or the lack of it, is one of the primary factors linked to wealth inequality. Multiple studies prove a widening income gap between those with a bachelor’s or higher degree and those with just a high school background. Education is the most powerful weapon in fighting poverty. Girls’ education is particularly important for a variety of reasons, including to increase women’s labour participation. Sadly, the state of education inequality today is still staggering. Nine out of ten children (aged 10) in high-income countries can read. Nine out of ten children (aged 10) in low-income countries cannot. Inequalities in education have persisted not just across countries, but also across regions, within countries, across schools and different social groups.

To address these inequalities, it is necessary to consider that school success goes beyond academic subjects and demands a holistic approach. To unlock children’s full potential, programmes should focus further on socio-emotional learning, physical development, arts, crafts and music; and involve parental engagement in children’s learning. Family strongly contributes to a child’s education. Parents who provide a dedicated time and space for their children to study significantly increase their children’s learning, especially for girls who are often asked to help with chores.

When trying to meaningfully maximise children’s learning, education equity becomes central. Education alone will not generate education equity if certain aspects are dismissed. Is the familial environment helpful? How are the teachers educated? Does the education system include marginalised groups? Children with a different mother tongue than the language of instruction at school often face significant learning disadvantages. Accordingly, quality education suggests an education that takes all these aspects into account: the holistic curriculum, the learning environment and, further, employability and vocational skills for successful careers after school. When all these factors positively coalesce, education can play a major role in reducing wealth inequality.

Academia and philanthropy as allies

Through a multidisciplinary approach, academia is dissecting the issue of wealth inequality. Economics, anthropology and sociology all contribute to the knowledge base around the topic. When science supports philanthropy in its interventions, the two become a strong force for change. It is philanthropy’s strength to allow time and space in its investments. With patience and commitment, the two disciplines can trigger demonstrated snowball effects for true impact.