Americans prefer economic inequality to playing Robin Hood, study finds

March 19, 2018, Washington University in St. Louis
Credit: CC0 Public Domain

Voters in modern democracies, such as the United States and Germany, have long held the power to take from the rich, give to the poor and erase the huge economic inequalities that separate the vast majority of a nation's citizens from its super-wealthy elites.

But given the chance to play Robin Hood, most people in these countries show little interest in making dramatic wealth transfers, choosing to redistribute only about 12 percent of all funds available to reduce inequities between rich and poor, suggests a new experimental study forthcoming in the Proceedings of the National Academy of Sciences.

"Participants in our experiment were willing to tolerate a considerable degree of even in a setting where they have full control over the final distribution of wealth and there are no costs to redistribution," said study co-author Michael Bechtel, associate professor of in Arts & Sciences at Washington University in St. Louis.

Co-authored with political scientists Roman Liesch of the University of St. Gallen in Switzerland and Kenneth Scheve of Stanford University, the study is among the first to examine how individuals change the distribution of wealth when confronted with clear-cut cases of favorable and unfavorable economic inequality.

Based on a randomized experiment conducted on a representative sample of about 5,000 adults in Germany and the United States, findings suggest that quirks of human behavior may explain why voters in democracies have been unable to reverse the soaring economic inequalities now fueling political polarization and extremism around the globe.

"A key finding in our study is that individuals are also divided over how to respond to scenarios in which they are richer than another person and scenarios in which they are poorer," Liesch said. "Those who take from the rich do not also tend to give to the poor and individuals who give to the poor do not tend to take from the rich."

Study participants were randomly selected through a raffle process to receive a pair of Amazon gift cards with designated values of $25, $50 or $75. Told which of the cards was their own, participants were then offered the option of using a "give-or-take" slide bar to transfer funds to or from the other card.

"Our findings show that when individuals are exposed to inequality and given the chance to equalize wealth, many still refrain from doing so," said Scheve, a professor of political science at Stanford University. "We also found that this behavior predicts in meaningful ways whether an individual supports heavy taxes on the rich and the provision of welfare benefits for the poor."

Other recent research, including a popular 2011 study by Michael I. Norton and Dan Ariely, has argued that economic inequalities persist because the poor have a skewed sense of their relative position within a nation's income distribution—they don't consider themselves to be especially poor and don't believe to be that great.

The assumption here, Bechtel said, seems to be that if voters knew the true level of inequality, they would remove it. However, the study's results suggest that this is not the case.

"In our experiment, there is no misperception of relative wealth," Scheve said. "Individuals know exactly how the value of their Amazon card compares to the other respondent's gift card, and they can fully remove inequality by giving to or taking from the other respondent."

Surprisingly, in a scenario where cardholders have the power to transfer every cent of someone else's card to themselves, most take only a small fraction of the funds available.

The authors also found that the people most likely to take funds from a wealthier cardholder are often unwilling to pass their own funds along to a poorer cardholder. Conversely, people most willing to share their money with poorer cardholders are less likely to take funds from those richer than themselves.

"This suggests that inequality persists in part because individuals are not averse enough to inequality. And because the aversion to favorable and unfavorable inequality is distributed in ways that make it difficult to marshal the level of public support needed to implement the type of 'Robin Hood' policies—taking from the rich and giving it to the poor—that would be most effective at reducing inequality," Bechtel said.

By providing a methodology to measure individual differences in willingness to redistribute wealth, the study offers a tool to gauge the likelihood that voters in a particular nation would support and enact progressive wealth redistribution programs.

In this study, German participants were more willing to reduce favorable and unfavorable inequality than Americans, and this tendency corresponds well with existing differences in real-life wealth transfer programs now in place in these countries.

Without tax transfers and other distribution programs, both nations would have similar levels of poverty (32 percent in the U.S. and 36 percent in Germany). However, using various progressive social programs, Germany reduces its poverty rate by 20 percent, compared with a reduction of only 8 percent for similar programs in the United States.

The authors believe their experimental results on how citizens respond to inequality in the United States and Germany also may explain both political support for and the actual level of government redistribution in other countries.

Explore further: Support for democracy linked to income inequality

More information: Michael M. Bechtel el al., "Inequality and redistribution behavior in a give-or-take game," PNAS (2018). www.pnas.org/cgi/doi/10.1073/pnas.1720457115

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dnatwork
3 / 5 (4) Mar 19, 2018
I don't see how they think they can extrapolate from their study to inequality in society. The difference between $25 and $75 is small. The difference between someone working 80 hours a week and still living below poverty level while paying huge payroll taxes and other costs, versus someone raking in billions and paying no tax, is huge.
MR166
2 / 5 (8) Mar 19, 2018
If only the world had a more powerful governments and laws all inequality would be solved. Venezuela has done a marvelous job of proving this and eliminating the wealth gap.

Students are notorious for wanting to give away other peoples money. This is just more useless research from a biased progressive academia. When I see professors willing to lower their own salaries and work more hours in order to lower the student's tuitions I will start to believe in the redistribution that they are trying to implement.
dogbert
3 / 5 (8) Mar 19, 2018
If only the world had a more powerful governments and laws all inequality would be solved. Venezuela has done a marvelous job of proving this and eliminating the wealth gap.


Yes. Venezuela has nearly eliminated economic inequality. Schemes which seek to eliminate economic inequality always succeed to the extent that they expand poverty. When everyone is poor, economic inequality is no longer a factor.

If you eliminate the rich, you eliminate the paths by which countries become wealthy.
tblakely1357
2.1 / 5 (7) Mar 19, 2018
To achieve income 'equalization' requires the government to control all wealth which is the path to serfdom.... not surprisingly, to many politicians this is a feature not a bug.
marcush
4.2 / 5 (5) Mar 19, 2018
The main argument for allowing income inequality is that your fate is your responsibility and therefor its free and fair. However it is indisputable that those born wealthy will have a greater chance at accumulating wealth than those born to poverty. Hence, while your own decisions contribute to your fate, your circumstances do also. There are always exceptions but that doesn't negate the average. Many Americans seem to ignore this fundamental truth. Do you want to live in a medieval type society where there is an entrenched aristocracy and poor underclass or more a meritocracy??

The problem with demanding that certain individuals, such as academics give up their salary for students before you take them seriously is that personal sacrifice is different to wanting a society-wide contribution. Why should academics give up salary and not everyone else? If its for the benefit of society as a whole then there shouldn't be any free-riders.
aksdad
1 / 5 (2) Mar 19, 2018
However it is indisputable that those born wealthy will have a greater chance at accumulating wealth than those born to poverty.

So?
Do you want to live in a medieval type society where there is an entrenched aristocracy and poor underclass or more a meritocracy?

It's not a binary choice. In America we live in a society that does have an "entrenched aristocracy" AND a meritocracy. That's the beauty of freedom. Someone else inheriting their wealth doesn't mean I have to be poor. I can become wealthy too by working for it, thanks to...wait for it...the same freedom that allows wealthy people to pass on their wealth to their children who didn't earn it.

Maybe you could provide us an example of this utopian society where there is no income inequality and everyone is free.
szore88
1.8 / 5 (5) Mar 19, 2018
So sick of these left wingers...
GaryB
5 / 5 (3) Mar 20, 2018
Venezuela has nearly eliminated economic inequality. Schemes which seek to eliminate economic inequality always succeed to the extent that they expand poverty.


First, this was a study of human nature, not a prescription of what should be done.

Second, a misleading way to argue is "all or none". You bring up the example of Venezuela, but not the United States. We had China level growth rates, strong income growth across the economy since the 50s together with quite high taxes. This all changed with Reagan's large tax cuts. The rich took off, everyone else treaded water or sunk.

Why? Because 1 Billionaire (I'm friends with several) buys maybe 10 cars. 1000 millionaires buy 2000 cars. We end up with a low demand economy, hence low growth, hence many economic bubbles as the rich chase investment returns that have no real demand support.

If you allow rich, but tax for infrastructure, you get higher growth and economic mobility.
GaryB
5 / 5 (2) Mar 20, 2018
However it is indisputable that those born wealthy will have a greater chance at accumulating wealth than those born to poverty.

So?
Do you want to live in a medieval type society where there is an entrenched aristocracy and poor underclass or more a meritocracy?

It's not a binary choice.


Exactly! We CAN tax wealth and spend on infrastructure to an extent where people can still get quite rich, but the poor are not stuck. Your argument that you can have an oligarchy and social mobility is not very true. Sure, give someone 3 aces and then start dealing in a poker game, I ~may~ be able to still win, but not likely. But, take away a damn ace and fling it back into the pot ... ah, he's still rich, but I have a better shot. This is well studied:

"Stokey and Rebelo (1995) argue that it is hard to de- tect a negative growth impact of the rise in income tax rates implemented in the U.S." http://www.kellog...near.pdf
marcush
not rated yet Mar 20, 2018
I agree you can have both to a degree. I guess it's where along the scale you want society to be. The underclass seems so large in the US that I'd rather live elsewhere.
marcush
not rated yet Mar 20, 2018
Ps yes the poor are not stuck. A rather low % of them make it out. Shouldn't they have as much chance of making it as anyone else?
mackita
5 / 5 (1) Mar 20, 2018
If you eliminate the rich, you eliminate the paths by which countries become wealthy
We should distinguish the communist or even antiequal experiments from balancing the social advantage in access to education and money, which the rich people already have (1, 2). Stephen Hawking's final Reddit post was an ominous warning about the future of humanity and capitalism: "The trend seems to be toward the second option, with technology driving ever-increasing inequality". In particular, the equal access to education is important for healthy society.
mackita
3.7 / 5 (3) Mar 20, 2018
Equality Is Efficient: Rich people, simply put, don't get as much use out of their money as poor people do. We can't tax ourselves into prosperity or equality. Redistribution is never efficient from the point of view of the people having their property redistributed. But what America is lacking by now is strong middle class. Note that at the end of 60's when the USA were way richer and powerfull, the wage equality was way more pronounced. The income inequality isn't the sign of wealthy country but the opposite - it just cannot be reached artificially.
lupus
3 / 5 (6) Mar 20, 2018
There seems to be an assumption in this study that wealth transfers from the rich to the poor will actually result in equality. My observation however is that it results in a dis-empowered underclass that ceases to feel any need to contribute. Drugs, dysfunctional families, gangs, crime, alcoholism and a strong sense of entitlement to other peoples hard earned money are what really results.

In the US, the problems started when Nixon ended gold convertibility for the dollar because of excess spending on welfare and the Vietnam war. This allowed massive money printing without taxation. Without the need for taxation, jobs were freely exported and the working / middle class hollowed out. In 2008, money printing got worse again with Wall St now the beneficiary. Having the reserve currency has massively benefited the US financially but squandering the benefit on welfare and warfare has caused massive social damage. The wealth divide is all about government policy not individual action.
antialias_physorg
5 / 5 (4) Mar 20, 2018
Surprisingly, in a scenario where cardholders have the power to transfer every cent of someone else's card to themselves, most take only a small fraction of the funds available.

I don't find this surprising. Those who want equality also don't want to hurt others. It's not about making everything equal, but about giving everyone their fair share. These are two entirely different concepts.

The goal is to see to it that the same amount of *effort* results in the same amount of remuneration - instead of giving extraordinarily high amounts for some jobs and almost nothing for others even though both require the person to put in a solid workday.

If someone makes an extra effort they should be rewarded for it. The height of the reward should be independent of the job (whether it's a trash collector or a top banker).
There should be no extra reward for gaming the system (which is how it currently 'works').
NoStrings
1 / 5 (4) Mar 20, 2018
Poppycock article.
TheGhostofOtto1923
1 / 5 (2) Mar 20, 2018
So sad that the left needs garbage spin material such as this in order to survive.
but about giving everyone their fair share
-which certainly doesn't involve taking from hard working citizens and giving to people who are unwilling to earn their own.

Don't you agree?
The height of the reward should be independent of the job (whether it's a trash collector or a top banker)
Ie downtrodden garbage collector vs evil bankster.

How about garbage collector vs the guy who established the company that employs dozens of garbage collectors? Should one earn the same as the other?
TheGhostofOtto1923
1 / 5 (2) Mar 20, 2018
If only the world had a more powerful governments and laws all inequality would be solved. Venezuela has done a marvelous job of proving this and eliminating the wealth gap
Uh huh. And how did this work out in nazi Germany? Thats about as powerful as you can get. Sadly, still plenty of unscrupulous banksters and industrialists and filthy rich politicians.

The Soviet union certainly had equality but it required the elimination of a whole class of unequal earners. I suppose killing off all the talented, ambitious people is one way to achieve equality.

Perhaps the only way.
MR166
2.3 / 5 (3) Mar 20, 2018
"The main argument for allowing income inequality is that your fate is your responsibility and therefor its free and fair. However it is indisputable that those born wealthy will have a greater chance at accumulating wealth than those born to poverty. "

Just as obtaining a higher education is supposed to allow you to earn more money by increasing your knowledge so does associating with the rich. THAT is why being a rich child increases you chance of remaining rich. You learn about money and how to invest/preserve it. Give a poor person 2 million dollars and soon it will all be gone while a rich family will invest it, make it grow and employ others in the process helping even the poor.
MR166
2.3 / 5 (3) Mar 20, 2018
"
The goal is to see to it that the same amount of *effort* results in the same amount of remuneration - instead of giving extraordinarily high amounts for some jobs and almost nothing for others even though both require the person to put in a solid workday."

Life does not work that way. I can guarantee that you would not pay $300/ticket to hear me sing or have me operate on your child. People get paid in proportion to their their marketable skills.
MR166
2.3 / 5 (3) Mar 20, 2018
"Why should academics give up salary and not everyone else?"

Marcush academics are one of the main groups teaching and promulgating this progressive/socialist anti rich narrative. Let them lead by example since it is their industry whose costs have skyrocketed WAY higher than the rate of inflation. Education is funded in large part by local taxes and tax exemptions. In other words they benefit from the same big government that they are trying to create. No conflict of interest there eh?
MR166
3 / 5 (2) Mar 20, 2018
It is the very same sort of hypocrisy as shown by the AGW crowd flying to the climate summits in their private jets.
antialias_physorg
5 / 5 (3) Mar 20, 2018
There seems to be an assumption in this study that wealth transfers from the rich to the poor will actually result in equality. My observation however is that it results in a dis-empowered underclass that ceases to feel any need to contribute.

The experiments under way of giving people a base income for 'nothing' in some countries speak otherwise. People do want to contribute. The number of people who abuse this to stop doing anything doesn't increase (mainly because those who really don't care will not contribute - or 'do drugs' or whatever boogeyman you wish to paint it as - even without this income. Keeping them poorer does not increase their drive)

The drive to contribute should also be separated from the drive to compete. When the rich (and their kids) have so much of a head start then I can see where some may lose the drive to compete. The barriers they put up - be it supremely expensive educational systems or hordes of lawyers can seem insurmountable.
MR166
3 / 5 (2) Mar 20, 2018
"The barriers they put up - be it supremely expensive educational systems......."

Who exactly is the "They" creating the expensive educational systems? Basically that is traceable directly to "free" government education and government induced student loans.
MR166
3 / 5 (2) Mar 20, 2018
The sad fact is that while the poor are talking about Beyonce's rear end the rich are talking about opening new businesses.
TheGhostofOtto1923
3 / 5 (2) Mar 20, 2018
Keeping them poorer does not increase their drive
??? An empty belly does tend to motivate. So does the prospect of living on the street. For most people.

Yes, yes it does.
mackita
2.3 / 5 (3) Mar 20, 2018
It's not about making everything equal, but about giving everyone their fair share. These are two entirely different concepts.
"Fair share"? What it supposed to be? Who should define it?
"Why should academics give up salary and not everyone else?"
For one century standing boycott and denial of breakthrough findings which could help us all, for example?
jonesdave
not rated yet Mar 20, 2018
Who gives a toss about what Americans think? The vast majority of the world does not live in America. Frankly, I've always seen it as a dumping place for the complete loons that used to inhabit our continent. Fine. You deal with the dickheads. We gave up on the loons centuries ago. Now you're stuck with the loons. Happy days.
MR166
not rated yet Mar 20, 2018
Loons eh JD! When Europe is reduced to a ME 3rd world nation in a few short years due to unfettered immigration I really hope that the US denies your visa.
sascoflame
not rated yet Mar 21, 2018
Why are the alternatives absurdly extreme. What you are saying is the we should initiate slavery so we do not have wealth transfer. Whose wealth is being transfered of a person is not paid in proportion to the value he creates. The money is transferred from working people to the rich. And you didn't . give them enough time to take it all in. Would you like to keep the system we have now or communism.I am sure that will these results you will continue to get a lot of funding.
SkyLy
not rated yet Mar 23, 2018
Economics and propaganda, a love story.

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