BUSINESS

Elites Don't Favor Income Equality When It Costs Them Too Much

Even if they're Democrats.

A new behavioral economics study shows that elites don't favor a level economic playing field when it's expensive for them to do so, regardless of where they position themselves on the political spectrum.

The report, which a group of economists published in the journal Science, shows that the uber-priviledged are more likely to choose an efficient solution over an equal one when it comes to redistributing wealth -- and it doesn't matter whether they're Republicans or Democrats.

The authors recapped their findings over at Slate:

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.

The researchers examined three groups for the study: One represented Americans across the income spectrum and was selected to represent the country's population at large; a second contained Berkeley grads with bachelor's degrees (the "intermediary elite"); and the third consisted of Yale Law School students (the "extreme elite"). The people in these groups took part in a game set up by the researchers where they were told they had a certain amount of money each and could redistribute some of it to an anonymous person if they wanted. 

Here's the game in more detail, from Slate:

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 study found that pretty much everyone believed in redistribution, but elites became less okay with it when they had to offer more to make a greater impact. When the cost of giving away money went up (for example, when giving a dollar only gave 10 cents to the other person), Yale Law students -- almost all of whom identified themselves as Democrats -- were much less likely to want to give their money away than the group of regular people. In the economists' parlance, the elites "favored efficiency over equality."

About half of regular people preferred efficiency over equality. Berkeley grads favored efficiency by a factor of 3-to-2, and Yale students favored the efficient outcome by 4-to-1.

This outcome has some major policy implications, as indicated by the researchers. The top levels of government are full of elites. And even those who say they believe in redistribution and equality might not be willing to spend what it takes to actually achieve that. 

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