Most people profess to agree that those who can afford to do so ought to try to help those who endure economic deprivation through no fault of their own. Every major world religion calls for charity towards the poor. This seems to imply that the harsh effects of bad fortune are considered an unjustified basis for income inequality.

But what about good fortune? If a person obtains wealth or income due to nothing but luck, is she entitled to keep her winnings? Are they to be considered earned? Deserved?

A recent experiment by a group of Norwegian economists suggests that how people think about this is significantly predicted by—we might say predictive of—their political outlook. Alexander Cappelen, Sebastian Fest, Erik Sorensen and Bertil Tungodden* had subjects perform some tasks in return for a guaranteed participation fee of about $11 and the possibility of earning considerably more. In the experiment, subjects were randomly assigned to either a high or a low payout status whereby half would get $88 (additional to the base fee) and the other half $0. In the baseline treatment, who was a winner and who a loser was determined by the experimenters drawing colored balls from an urn containing an equal number of green and of yellow balls; those for whom a yellow ball was drawn were winners.

A second treatment worked almost the same way, except that in it each subject was asked to decide which color of ball would count as a winning one for him or herself. Each was told at the outset that there was an urn containing equal numbers of yellow and of green balls. If a subject chose yellow (green) and a yellow (green) ball was randomly drawn for her, she was assigned the $88 payment, otherwise she got $0.

In both treatments, each winner was randomly matched with one loser, creating a pairing within which one person was to earn $88, the other $0. Then a spectator was asked whether to alter that distribution, without affecting the total amount. The spectator could change the ($88, $0) division to ($78, $10), ($68, $20), and so on—even reversing the inequality to ($0, $88). No guidance was offered by the experimenters as to what might motivate changing the distribution, and the instructions neither emphasized that the default earnings were highly unequal nor that the spectator’s job was to decide whether to make them more equal.

Perhaps for convenience, but perhaps also conferring a degree of identification with the affected parties’ situations, spectators were also participants, but were deciding the distributions of others. Each participant, that is, while being assigned to a pair as a $0 or $88 earner in her own right, was also being asked to act as a spectator for a different pair of participants whose identities would remain unknown to him. His own income might be similarly modified by the choice of a different anonymous spectator.

The first finding was that whether subjects had been given the chance to choose the winning ball color had a statistically significant effect on the number of third parties who choose to redistribute, and on the amount they redistributed if so. In the baseline condition, where subjects had no say over what was the winning color, only about 10% chose to leave the unequal distribution as it was, with about 60% choosing to fully equalize the distribution and the remaining 40% choosing various partial degrees of redistribution.  But in the treatment in which each subject had selected his or her winning color, a larger proportion, about 20%, left the inequality as it was, with a smaller 40% dividing equally.

The experimenters also collected some demographic and other information from each participant. One question asked what party the subject had supported in a recent election. When they divided the sample into left versus right leaning voters, they found that for left-leaning voters, the shares choosing to equally redistribute versus leave alone the distribution were not significantly different in the baseline versus the “choose your color” treatments. Right-leaning voters, on the other hand, chose substantially and significantly less redistribution in the treatment with choice of color than in the baseline.

A possible interpretation is that left and right leaning voters subscribe to differing ethical theories. To many left voters, luck seems a morally irrelevant basis for differences in reward, and choosing the ball color doesn’t materially change the fact that gain and loss are determined by luck. To many right voters, in contrast, good or bad fortune may be irrelevant to just reward when the affected individuals are entirely passive, but so small a role as correctly naming the winning color suffices to confer desert. Their gut feeling appears to be “if I make a correct guess and gain something from doing it, no one has the right to take that from me.”

Improving our understanding of how societies might successfully moderate the inequalities that flow from differences in family environment and connections, temperament, and other factors, while maintaining broad consent among the affected parties, will require us to better understand the role that such reasoning plays. One impact of the Cappelen et al. experiment may be that it adds to the case that whether you see the world in a more conservative or a more liberal way is partly determined by psychological predispositions. If naming a color seems to you to impart entitlement, you may be a born conservative; if it strikes you as an irrelevance, a born liberal.  But causality likely flows in the other direction as well: conservative (liberal) voters are more likely to interact with and hear the arguments of other conservatives (liberals), and thus gradually fashion and strengthen commitments to principles such as the rejection (approval) of redistribution that in turn influence choices in environments like that of the decision lab.

Regardless of the origins of this disposition, a belief that no one is entitled to take away from the successful the fruits of their good luck poses a serious obstacle to acting on the equally widely held belief that those suffering deprivation through no fault of their own deserve assistance. How would such assistance be funded? Leaving help of the poor to the voluntary impulses of individuals can address this dilemma, in theory, but the experience of the last few centuries suggests that involving governments in the social support of the disadvantaged tends to be more effective than leaving the job to charity. Achieving a greater degree of consensus on what income flows are appropriate targets of taxation for funding the social safety net that so many citizens wish to preserve remains a challenge for efforts to build prosperous, humane and sustainable societies.

References

Alexander Cappelen, Sebastian Fest, Erik Sorensen and Bertil Tungodden, “Choice and personal responsibility: What is a morally relevant choice?” Discussion Paper, Department of Economics/NHH Norwegian School of Economics, Dec. 2016. https://www.nhh.no/en/research-centres/the-choicelab/media/news/2016/december/updated-working-paper/  

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