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Wednesday, April 11, 2007

Sacrificing for Equality

A new experiment concludes that we are willing to pay a cost in order to reduce inequality:

Robin Hoods: Study Determines We Prefer Distributed Wealth, Scientific American: Seems we like to give to the poor, but only slightly more than we like to rob the rich, according to a new study published in Nature.

Researchers at the University of California, Davis, ... randomly separated 120 students into groups of four. Each subject was arbitrarily assigned a certain amount of money; players knew how much money the others in their group had, but not to whom each amount belonged. Each player had the option of using some of his or her money to purchase the right to have the researchers subtract or award cash to another participant.

Subjects played the "game'' with different people in each of five trials Each time, "players'' adopted an egalitarian attitude when distributing the wealth in what study co-author and University of California, San Diego, political scientist James Fowler calls the "Robin Hood effect."

"People want to give rewards to the lowest [paid] member of the group and take away from the highest [paid] member of the group," he says. "I think that we were surprised by the magnitude of the punishment." Nearly 70 percent of the players reduced someone else's income at least once, and three quarters of them gave up a little to help someone in a weaker position. The behavior was consistent across all five trials...

"These egalitarian impulses that we have are stronger than we previously realized," Fowler says. He notes that in previous studies, in which participants contributed to a shared fund, the ones who gave the least to the community pool were penalized most often. Those studies, however, were not able to determine whether participants were handing out punishments because of resentment over others' wealth or because they felt they were being cheated. In the current study, personal wealth was an isolated variable and cooperation among the group was removed... "What we show is that anger and annoyance towards people who earn more,'' Fowler says, "cause [participants] to punish nearly as much as they do in public goods games."

"The egalitarian impulse is one of the reasons why we exhibit more cooperation than other species," he adds. "[We are] more likely to punish people that don't cooperate, even when it's not in our best interest."

Ernst Fehr, a professor at ... the University of Zurich in Switzerland, says the study shows that a combination of altruistic and egalitarian motives prompts us to punish free riders. "The current results," he says, "are also interesting in view of the anthropological evidence from many small-scale societies that indicates food sharing has been widespread, and that these small-scale societies developed a kind of mini–welfare state that redistributes income through food sharing regardless of hunting success."

One question is whether the magnitude of the response would change if participants believed that people earned the wealth (and hence deserve it) rather than just benefiting from the luck of the draw. The perception people have about the source of the inequality may matter.

    Posted by on Wednesday, April 11, 2007 at 12:32 PM in Economics, Income Distribution | Permalink  TrackBack (0)  Comments (5)

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