“Why
Income Inequality Isn’t Going Anywhere: Rich elites — even
rich liberal elites
— don’t believe in redistributing wealth”
By Ray
Fisman and Daniel Markovits
[Published
originally in Science and online in Slate, September 18, 2015]
“[Novelists]
F. Scott Fitzgerald and Ernest Hemingway famously disagreed about the American
elite. ‘The very rich are different from you and me,’ Fitzgerald wrote. ‘Yes,’
Hemingway shot back, ‘they have more money.’ With inequality in America
continuing to rise, we revisited Fitzgerald and Hemingway’s (perhaps
apocryphal) dispute, conducting a series of experiments designed to pinpoint
the differences between the rich and those of more modest means.
“The
conventional view of America as a classless society has long sided with Hemingway—the
only difference is the money. But our results suggest that, at least when it
comes to attitudes toward inequality, Fitzgerald is right: Elite Americans are
not just middle-class people with more money. They display distinctive
attitudes on basic moral and political questions concerning economic justice.
Simply put, the rich place a much lower value on equality than the rest. What’s
more, this lack of concern about inequality among the elite is not a partisan
matter. Even when they self-identify as progressive Democrats, elite Americans
value equality less highly than their middle-class compatriots.
“This
finding has profound implications for public policy. Contemporary American
politics presents an enduring mystery. Why does the public policy response to
nearly five decades of rising economic inequality remain so tepid, even as
large majorities of Americans consider inequality excessive, and even under a
two-term Democratic president? Our study,
published Thursday in the journal Science,
co-authored with colleagues Pamela Jakiela and Shachar Kariv, proposes an
answer: Regardless of party, the elite donors whose money dominates politics,
and the elite officeholders whose decisions set policy, don’t value economic
equality. When the American government abjures egalitarian policies, it is
implementing the bipartisan preferences of the American elite.
“We
measured attitudes toward equality by asking hundreds of Americans to
distribute a pot of money between themselves and an anonymous other person. Our
subjects weren’t making hypothetical choices in responding to the survey—their
decisions affected how much real money they would get when the experiment
ended.
“Each
subject could keep or redistribute as much of her budget as she liked, but with
a twist. Whereas the standard version of this experiment — known to economists
as a ‘dictator game’ — asks subjects to split a fixed pie, we varied the
‘price’ of redistribution. In some cases, giving was expensive: Every dollar of
her own that a subject sacrificed bought her anonymous beneficiary as little as
a dime. In other cases, giving was ‘cheap’: Every dollar sacrificed contributed
as much as $10 to her beneficiary. Most cases fell between these extremes.
“The
choices that subjects made provide a window into their attitudes toward
economic justice. First, the experiment allowed us to measure subjects’
selfishness. A ‘selfish’ subject keeps the entire pie, regardless of the price
of giving. By contrast, a ‘fair-minded’ subject does not prefer herself over
her beneficiary, so that, for example, if she keeps a lot when giving is
expensive, she will give a lot when giving is cheap. This means that on
average, across all prices of giving, a fair-minded person keeps and gives
about the same amount of money.
“Our experiment
also allowed us to measure how subjects trade off equality against efficiency.
Subjects who care only about efficiency respond very sensitively to changes in
the price of redistribution. When giving is expensive, they give little; when
it is cheap, they give a lot. By contrast, an equality-minded subject will
always ensure that both she and her recipient end up with the same amount, even
if it means that less money is paid out overall.
“Both
trade-offs play central roles in the crafting of economic and social policy.
The trade-off between selfishness and fair-mindedness informs the willingness
of the haves to make sacrifices in order to aid the have-nots.’The
trade-off between efficiency and equality speaks to the tolerance that
policymakers have for redistributive programs (like taxing the rich and
productive to support the poor) that might lead to lower GDP but divide our
country’s income up more equally. Especially where redistribution transfers
resources from the rich to the poor using what economists call leaky buckets,
the trade-off between efficiency and equality determines how big a leak is
acceptable.
“We
invited three very different classes of subjects to play our game and thus
reveal their distribution preferences. The first came from the American Life
Panel, or ALP, an Internet-based pool constructed by the RAND Corp. to
resemble, as accurately as possible, the American public at large: It’s
composed of Americans from across the economic and social spectrum. The
second class constituted an intermediate elite. It was made up of
undergraduates at the University of California–Berkeley, one of the most
selective colleges in America and indeed the world, and a subset from the
American Life Panel filtered to hold post-B.A. degrees and enjoy household
annual incomes of more than $100,000. The third and final class
constituted an extreme elite, constructed from the student body at Yale Law
School. The median annual income of recent Yale Law graduates exceeds $160,000;
among its alumni are former President Clinton and Democratic front-runner
Hillary Clinton, as well as Supreme Court Justices Samuel Alito, Clarence
Thomas, and Sotomayor. Yale Law students constitute an extreme elite if ever
there was one. (By comparing the behavior of Yale Law and Berkeley students, as
well as the ALP elite, with that of the general population, we can have greater
confidence that the differences we are noticing relate to eliteness rather than
some idiosyncratic attribute of future lawyers or students at Yale.)
“The
experimental behaviors of these three subject classes — once again, making real
allocations with real money — revealed stark differences between attitudes
toward economic justice among ordinary Americans and among the elite. To begin
with, the Berkeley and Yale subjects were twice as likely to be selfish as
their compatriots in general. In this respect, intermediate and extreme elites
stand together with each other, and stand apart from the rest of the country.
“What’s
more, elite Americans show a far greater commitment to efficiency over equality
than ordinary Americans. And this time, the bias toward efficiency increases
with each increment of eliteness. The ALP subjects split roughly evenly between
focusing on efficiency and focusing on equality; the Berkeley students favored
efficiency over equality by a factor of roughly 3-to-2; and the Yale Law
students favored efficiency by a factor of 4-to-1.
“Yale Law
students’ overwhelming, indeed almost eccentric, commitment to efficiency over
equality is all the more astonishing given that the students self-identified as
Democrats rather than Republicans—and thus sided with the party that claims to
represent economic equality in partisan politics—by a factor of more than
10-to-1. An elite constituted by highly partisan Democrats thus showed an
immensely greater commitment to efficiency over equality than the bipartisan
population at large.
“Elites’
preferences matter. The American elite overwhelmingly dominates both campaign
finance and political lobbying, and American policymakers themselves come
overwhelmingly from elite circles—the powerbroker Yale Law alumni mentioned
above represent just the tip of a vast iceberg.
“Our
results thus shine a revealing light on American politics and policy. They
suggest that the policy response to rising economic inequality lags so far
behind the preferences of ordinary Americans for the simple reason that the
elites who make policy — regardless of political party — just don’t care much
about equality.
“Hemingway’s
illusory but widely shared view that the only thing that separates the rich
from the rest is their money thus disguises a central pathology of American
public life. When American government undemocratically underdelivers economic
equality, the cause is less party than caste.
“Democracy
gives the mass of citizens a path for protest when the gap between ordinary
views and a closed rank of elite opinion grows too great. The populist
insurgencies that increasingly dominate the contests to select both the
Republican and Democratic candidates in the upcoming presidential election show
the protest path in action. Elites — in both parties — remain baffled by Donald
Trump and Bernie Sanders’ appeal; and they prayerfully insist that both
campaigns will soon fade away. Our study suggests a different interpretation,
however. These bipartisan disruptions of elite political control are no flash
in the pan, or flings born of summer silliness. They are early skirmishes in a
coming class war.”
