Field study suggests wealthy less willing to tax rich when poor people are around

January 10, 2017 by Bob Yirka report
Credit: George Hodan/public domain

(Phys.org)—A study conducted by a researcher with Harvard University suggests that wealthy people are less likely to support income redistribution through a tax on the very rich after having recently been exposed to an obviously poor person. In her paper published in Proceedings of the National Academy of Sciences, Melissa Sands describes a study she carried out using volunteers in wealthy neighborhoods, what she found and her opinions regarding the impact it could be having on domestic policy decisions.

Most people are aware of the growing divide between the very wealthy (the so-called 1 percent) and everyone else in the United States. The issue has led some to call for income redistribution by forcing the very rich to pay more taxes with the extra money going to help the poor. For such actions to actually happen, ordinary people would have to support such an initiative led by politicians. To learn more about how people might react to such an initiative in the form of a petition in a public place, Sands enlisted the assistance of several volunteers.

The study consisted of having male volunteers (some white, some black) pose as either a reasonably affluent person or as someone obviously very poor. The volunteers were stationed in affluent areas in places where affluent people would have to walk past them to reach their destination, but just before arriving, they would be asked by another volunteer dressed as an affluent person to sign one of two petitions. One of the petitions supported a way to reduce the use of plastic bags (the control), while the other sought support for a 4 percent income tax increase for anyone making more than a million dollars a year. The idea was to see if people felt differently about signing a petition to tax millionaires after exposure to a rich or poor person.

The researchers surveyed 2,519 people and found that contrary to what might seem logical to some, affluent people were less likely to support taxing millionaires after having met a poor person than if they had just seen someone more affluent—those surveyed were approximately twice as likely to sign the tax petition after seeing an affluent man than a poor white man. Interestingly, they were less impacted by the sight of a poor black man. Sands suggests the sight of a poor white man may have caused the affluent to be more judgmental due to a feeling that such a person should be doing better without assistance.

Explore further: Support for democracy linked to income inequality

More information: Melissa L. Sands. Exposure to inequality affects support for redistribution, Proceedings of the National Academy of Sciences (2017). DOI: 10.1073/pnas.1615010113

Abstract
The distribution of wealth in the United States and countries around the world is highly skewed. How does visible economic inequality affect well-off individuals' support for redistribution? Using a placebo-controlled field experiment, I randomize the presence of poverty-stricken people in public spaces frequented by the affluent. Passersby were asked to sign a petition calling for greater redistribution through a "millionaire's tax." Results from 2,591 solicitations show that in a real-world-setting exposure to inequality decreases affluent individuals' willingness to redistribute. The finding that exposure to inequality begets inequality has fundamental implications for policymakers and informs our understanding of the effects of poverty, inequality, and economic segregation. Confederate race and socioeconomic status, both of which were randomized, are shown to interact such that treatment effects vary according to the race, as well as gender, of the subject.

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13 comments

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antialias_physorg
4 / 5 (2) Jan 10, 2017
Are they saying here - given that the recently rich/poor person they met is on their minds - that people are more into punishing people that are financially ahead of them rather than helping people who are behind?
waltsyd
5 / 5 (3) Jan 10, 2017
Perhaps a certain amount of subconscious fear of becoming poor themselves leads them to want to keep their money.
billpress11
4.2 / 5 (5) Jan 10, 2017
What I got out of this article was that people doing reasonably well exposed closely to the poor are less willing to redistribute the wealth of the very rich. That makes sense because getting to know the poor on a personal basis one sees clearly why they are poor, many reasons including a lack of self discipline in a good work ethic.
If all the wealth in a nation was distributed equally among all the adults, 1/2 the adults would be poor again within a year.
BrettC
4.8 / 5 (4) Jan 10, 2017
The problem I have is that, the wealthy could pay far less in interest than the any one else. How much does a $300,000 dollar house cost to someone that can pay for it without a loan...$300,000. The rest of us pay $900,000 for the same house.
Zzzzzzzz
not rated yet Jan 10, 2017
Brett - its not quite that simple. If I can pay cash for the $300k house, I am making a trade. I am trading the gain the $300k is providing in its current use for the gain it provides when invested in the real estate. If I use a mortgage instead, the equation becomes more complex, under current tax law. There is a gain that offsets some or all of the interest. If I live in that house, for example, my living expenses that would otherwise constitute a cost also offset the interest.
However your overall point is quite valid. Look at the interest cost, the sales tax cost, or any other government mandated type of cost from a percentage of total worth perspective, and its abundantly clear that wealthy people give a far smaller percentage of their worth to the government, no matter what comparable income tax brackets you might consider.
antigoracle
not rated yet Jan 10, 2017
Field study suggests wealthy less willing to tax rich when poor people are around

Just one more reason why, the only thing the wealthy would see the poor have and let them keep, is their distance.
Edenlegaia
not rated yet Jan 10, 2017
Riiiight....but just let's make sure to know how and why some people are poor, then. There's a difference between those with little self discipline, using money for their own pleasure without caring about spending it all, and those with more self discipline, using money carefully but not being able, due to circumstances, to earn a lot and thus remaining poor anyway.
Workers with good work ethics, coming from humble parts of society, but doing their job well and beyond, are mostly seen only as "workers". That means, poor uneducated lazy expendable bastards. People who will do shit job no matter their income and how much you increase it. Go and tell them no matter what and how they do, they'll never have more because screw them. Yep, they'll grow up cranky and angry towards richer people....with obviously better jobs.
Of course, there are plenty of other people with other shitty, awfully paid jobs with similar fate. Society needs them. It just doesn't care about their well being.
antialias_physorg
5 / 5 (2) Jan 11, 2017
Workers with good work ethics, coming from humble parts of society, but doing their job well and beyond, are mostly seen only as "workers".

And we should not discount the issue that economic mobility is pretty much a myth in the US (the 'rags to riches' blurb) - only beaten out by the UK.
Even if someone is highly motivated: If they're born poor the overwhelming likelyhood is that they will remain poor.
https://en.wikipe...ph-1.jpg

The 'poor are undisciplined/impulse driven' argument just doesn't stand up to examination.
billpress11
not rated yet Jan 11, 2017
AP, what is the link you gave trying to prove, that poor children become poor adults? Hey, I agree with that. That proves nothing about whether they and their parents are, or are not impulse driven.

They are by the very fact their parents decided to have more children than they evidently could raise to be upwardly mobile. And that is why the number (%) is so low.

There is an old saying, "the rich have the money, the poor have the children". There is a lot of truth in that old saying.

There millions of rags to riches stories around the world, and tens of millions more who succeed in raising their offspring better off than they were raised.

JongDan
not rated yet Jan 11, 2017
Yep, this is what happens when you learn a lot of people who are poor are there not because they had bad luck in life, but simply because they're bad at life.
ddaye
5 / 5 (1) Jan 11, 2017
That's not mainly how progressive taxation works. When taxes increase with income (progressively) it discourages the market from offering extreme compensation in the first place.That's why 50 years ago business execs for one example earned around 40 times their lower workers' income, whereas today they 300-500 times as much. Today they can keep most of it so the businesses are willing to offer it.
ddaye
5 / 5 (1) Jan 11, 2017
There millions of rags to riches stories around the world, and tens of millions more who succeed in raising their offspring better off than they were raised.

And there are a thousand times more people in the world than "millions." There are always a few percent of people who can rise above any adversity --poverty, rape, torture, near-death, you name it. And the conservative world view is that only those who can rise above near-certain sentence of lifetime misery "deserve" to rise, whereas for some mysterious reason all those who are born to comfort "deserve" to keep it.
Da Schneib
not rated yet Jan 11, 2017
The 'poor are undisciplined/impulse driven' argument just doesn't stand up to examination.
But this isn't about examination. It's about emotional reactions, which are by definition unexamined.

On the article, it's obvious that this is race based, but the opposite of what someone alleging racial bias would expect. Poor white people are more of an emotional problem for rich white people than poor black people are. It's about racial narratives. Rich white people *expect* black people to be poor. They think there's something *wrong* with poor white people. They should be punished for not holding up the side.

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