A/HRC/31/60 prominent role here.45 In particular, the observation that the debt-to-income ratio of the top 5 per cent and bottom 95 per cent households has undergone a dramatic reversion between 1983 and 2007 supports the latter view.29 Also, a negative link between income inequality and social mobility was found by analysing a sample of 16 countries. 46 For numerous developing and developed countries, it has also been shown that the increase in inequality was mainly due to an increase in between-group inequality, reflecting permanent income shocks.47 Explanations for persistent borrowing by low- and middle-income households despite growing income inequality can be found in several variants of the relative income hypothesis, according to which household consumption is a function of the household’s position in the income distribution and its past levels of consumption. 48 33. Another theory connects inequality, credit demand and monetary policy. It holds that highly unequal income distribution leads to overreliance on investment and luxury consumption. This may not be sufficient for a sustainable level of economic output, prompting low interest rates which itself allows private debt to increase beyond sustainable levels.49 34. In turn, the rise in the incomes of the richest will also increase their savings, leading to a huge accumulation of private wealth. This rising supply of capital requires more investment opportunities and consequently boosts the credit supply, even for riskier borrowers.50 Moreover, a possible consequence of this accumulation of private wealth is creditor-led lobbying to favour policies that may lead banks to issue risky loans and eventually to a massive distribution of subprime loans to low income individuals. It has been argued that “growing income inequality in the United States … led to political pressure for more housing credit”, which eventually “distorted lending in the financial sector”.51 35. It seems likely that the credit demand and credit supply channel are activated simultaneously. Other factors also play an important role. 52 A general shift towards a 45 46 47 48 49 50 51 52 See R.A. Moffitt and P. Gottschalk, “Trends in the transitory variance of male earnings in the United States, 1970-2004”, working paper No. 16833 (National Bureau of Economic Research, 2011); and M. Iacoviello, “Household debt and income inequality, 1963-2003”, Journal of Money, Credit and Banking, vol. 40, No. 5 (2008), pp. 929-965. See D. Andrews and A. Leigh, “More inequality, less social mobility”, Applied Economics Letters, vol. 16, No. 15 (2009), pp. 1489-1492. Ibid; see also R. Kanbur, C. Rhee and J. Zhuang, “Rising inequality in Asia and policy implications”, macroeconomics working paper No. 23973 (East Asian Bureau of Economic Research, 2014). See T. van Treeck, “Did inequality cause the United States financial crisis?”, Journal of Economic Survey, vol. 28 No. 3 (2014), pp. 421-448; and R.H. Frank, A.S. Levine and O. Dijk, “Expenditure cascades”, Review of Behavioral Economics, vol. 1, Nos. 1 and 2 (2014), pp. 55-73. See J.-P. Fitousso and F. Saraceno, “How deep is a crisis? Policy responses and structural factors behind diverging performances”, working document No. 2009-31 (Observatoire français des conjonctures économiques, 2009); and A.B. Atkinson and S. Morelli, “Economic crises and inequality”, Human Development Research Paper No. 2011/06, (United Nations Development Programme, 2011). See P. Lysandrou, “Global inequality, wealth concentration and the subprime crisis: a Marxian commodity theory analysis”, Development and Change, vol. 42, No. 1 (2011), pp. 183-208. See also M. Kumhof et al, “Inequality, leverage and crises” (footnote 29). See R.G. Rajan, Fault Lines: How hidden fractures still threaten the world economy, (Princeton, 2010); see also Galbraith, Inequality and Instability (footnote 43). See Bazillier and Hericourt, “The circular relationship between inequality, leverage and financial crisis” (footnote 28). 11