Deaton is leading a major review into inequality in the United Kingdom, which was launched Tuesday by the Institute for Fiscal Studies, an independent economic research institute.
The five-year project will aim to define causes of inequality in Britain and propose policy solutions.
To mark the launch, the IFS published a report showing that the United Kingdom has one of the highest levels of inequality in Europe. Among the world’s richest countries, only the United States is more unequal.
Unless there is a major change in policies, Deaton warned that the United Kingdom is at risk of following the path of the United States, where wages of white non-college-educated men haven’t grown in five decades, and where the number of poverty-related deaths from suicide, drug overdoses and alcohol abuse has risen dramatically.
The IFS report also warned that rising inequality threatens to destabilize the political system.
“Some have placed the surge in populism and the demise of established center-ground political parties at the feet of growing inequality and a greater sense of economic insecurity,” it said.
The “rules need to change” to stop working people from losing out, the IFS added. It warned that corporate governance is skewed to benefit shareholders over workers, undermining their wages for the sake of investors and corporate executives.
Only one in six people thinks capitalism is working well in Britain today, and more young people have a favorable view of socialism than of capitalism, the IFS report said.