Regardless of political affiliations, elite Americans might not be that interested in income equality, a study involving University of Maryland researchers found.
The study, published September in Science, set out to measure distributional preferences, or how people make trade-offs between themselves and others, specifically among extremely elite Americans, said Pamela Jakiela, a professor in this university’s agricultural and resource economics department.
Future elites favored monetary efficiency over equality by a factor of four in the controlled study, while the general population largely valued the two equally.
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To create a controlled environment in which they could measure these kinds of trade-offs, researchers evaluated a sample of 208 Yale Law School students as representing future elites in the context of the study, Daniel Markovits, a professor at Yale Law School who was involved with the study, wrote in an email. The students qualified for this role based on future economic and professional prospects.
“The median annual income of recent [Yale Law School] graduates exceeds $160,000 annually,” Markovits wrote. “And alumni include former President Bill Clinton, current Democratic front-runner Hilary [sic] Clinton and three sitting Supreme Court Justices.”
Researchers evaluated some of these students to see what kinds of preference behaviors they displayed and how they differed from those of more average Americans. The study used a modified version of a technique called the “dictator game” to measure subjects’ preferences toward distributional equality.
“One student receives some money and is given an opportunity to share that money with someone from the same population who did not get money,” Jakiela said. “This allows us to look at how fair-minded or self-interested people are in anonymous settings, when no one can tell if you’re being nice or not.”
The researchers also varied how much it would cost to transfer money from one subject to another individual, which allowed them to examine equality-efficiency trade-offs. In some situations, for example, lowering one’s own payoff by $1 increased the payoff to the other person by more than $1. In this case, giving was efficient because it increased the average payoff across the two people, Jakiela said.
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But in other scenarios, it could be that as the first player’s payoff is lowered by a dollar, the other player’s only goes up by 10 cents. In this case, she said, subjects who care about efficiency will give up very little because giving does not increase the average average payoff, but those who care more about equality will make larger transfers when the price of giving is high because they want to keep the other person’s payoff comparable to their own.
“[This study] allows us to separate how self-interested or fair-minded you are and how you trade off equality and efficiency,” Jakiela said. “So the equality-minded person will care more about equal payoff, whereas the efficiency-minded person might give very little when it’s costly to do so.”
Researchers compared results from Yale Law students to a general population sample of about 300 respondents to the American Life Panel survey.
The panel pool that represents the nation at large was roughly evenly split between focusing on efficiency and focusing on equality, Markovits wrote, and the Yale Law students favored efficiency by a factor of four to one.
This research could also help explain the relationship between aversion to inequality and political behavior. In the general population, being equality-focused in the experiment is associated with support for the Democratic Party, Jakiela said. But the patterns demonstrated among elite Yale Law students are quite different.
More than 90 percent of the Yale Law students evaluated said prior to the study that they were Democrats, which would indicate that they might be more pro-distribution, Jakiela said.
“But when we look at the experiment, they’re really off the charts in terms of their efficiency focus,” she said.
This research has a lot of implications for understanding the way the political system works and why people back the perspectives they do, said Kenneth Leonard, a professor in the agricultural and resource economics department who was not involved with this study.
Economists are very focused on the idea that everything has trade-offs, Leonard said, and this is an important issue in political discussions as well.
“If we want to understand why people would propose or support a policy that has certain implications, we have to look at how the real world works,” Leonard said. “What this study kind of helps show is how people are making the decisions they’re making.”
