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Society’s elite don’t want to pay too much for equality, study suggests

The well-educated and wealthy prefer giving to others when it is cheap and benefits everyone

Mark Wilson/Getty Images

America's well-educated and wealthy elite don’t like giving their money to others — unless sacrificing a small amount creates a big payoff for someone else, a study published in Science suggests. Otherwise, they’re opposed to giving up a lot of their own money to make everyone's earnings as equal as possible. In other words, the elite don’t want to part with too much of their own income.

This type of re-allocation favored by elites is what the study authors call a more efficient form of wealth redistribution (as opposed to an equitable one); it ensures that everyone benefits in some way, and that no one sacrifices too much of their own money. Since graduates of elite universities and professional schools tend to be policy makers, the study may explain why the divide between the rich and the poor continues to grow. "If they have this efficiency focus, it might make them averse to policies that would call for a greater demand for equity," study author Raymond Fisman, a behavioral economics professor at Boston University, tells The Verge. For instance, certain tax policies like the Bush tax cuts, which reduced top marginal tax rates, are thought to have contributed to this income inequality.

It may explain why the divide between the rich and the poor continues to grow

To measure America's preferences for income redistribution, Fisman and his team analyzed two different groups: 208 Yale Law students and 309 participants of a national survey known as the American Life Panel. The Yale Law students were representatives of the ultra elite — those with a graduate degree from an Ivy League school. The American Life Panel group served as a diverse representation of the general public.

The groups were given a series of hypothetical scenarios in which they were asked to redistribute money. Participants could give up part of their income so that money could be given to someone else; for instance, a person could forfeit a dollar so someone else would get an extra buck. In some cases, giving to someone else was cheap: a participant could sacrifice 10 cents and someone else would receive a dollar. Other times, giving was expensive: sacrificing a dollar would only result in someone else getting 10 cents. All the choices had varying degrees of trade-off.

The Sterling Law Building of the Yale Law School. (Ragesoss/Wikimedia Commons)

Those who favored efficiency liked to give to others when giving was cheap and others received more. Those who tended toward equality gave to others no matter what, to make sure everyone got a fair share. That means they gave to others even if it meant losing a significant amount of their own cash. "An equality-minded person is going to make sure both parties always get the same amount," said Fisman.

Members of the American Life Panel were much more likely to make things equal for everyone; around 37 percent were considered equity-minded, while a little less than half were considered efficiency-minded. (The rest did not give any money or rarely gave to others.) The Yale group, on the other hand, drastically skewed toward efficiency. Nearly 80 percent gave to others when both the giving was cheap and others received a much larger sum, while only 15 percent were thought to be equality focused.

"If we tax [rich] people at 99 percent, the pie grows more slowly."

These preferences also translated into the types of careers the Yale students pursued. The students who tended more toward equality went into public service law and worked at nonprofit organizations. Those with efficiency preferences pursued law in the corporate sector.

The findings may provide some insight into how policy is made in America. The wage gap between the elite and the working class has widened significantly since the 1970s; more than half of all income growth has gone to the top 1 percent over the past four decades. Total income has only grow by 20 percent for the rest of America's taxpayers. If the findings of the study are true of many or most elites, the "efficiency" mindset may be why income inequality isn’t being addressed, the authors suggest.

That’s because wealthy and well-educated people tend to be in positions to make policy decisions that affect wealth distribution. While the general public may want more redistribution to address income inequality, policymakers may not feel the same — as they think it would be inefficient for the country as a whole. For instance, "if we tax [rich] people at 99 percent, the pie grows more slowly," Fisman said.

It’s likely the Yale students favored efficient redistribution, because they felt they had earned the money they were giving to others, according to Keith Murnighan, a social scientist at Northwestern University, who was not involved in the study. The efficiency mindset centers on the belief that money should be given to people as a reward for good performance, and funds shouldn’t be doled out randomly to just anyone. The Yale students probably don’t want to give up too much of their own money, because most felt that they had worked hard for the cash that was given to them. "They think they’re responsible for their good outcomes," said Murnighan.

This way of thinking can be troublesome for helping to address income inequality in America, according to Murnighan. Many factors — not all of which have to do with the quality of work — determine a person’s income as an adult: socioeconomic status at birth greatly influences the level of education a person receives. However, he says it's understandable why people would support an efficient redistribution system. "Inequality is troublesome, but at the same time people want to be rewarded for doing better work," he said. "There is a sense of fairness associated with efficiency."