It is well known among economists that most people do not like income differences, especially when they are on the lower rungs of the economic ladder. This is shown in vote and scientific studies, but also everyday common sense. Yet many of our societies suffer from a widening gap between the haves and the have-nots. If we hate economic inequality so much, why do people support corporations that represent wealth in a small percentage of the population? A new cultural study led by economists working in China suggests a possible reason: people don’t want to redistribute wealth if they think it will upset social norms.
Zhejiang University business school professor Zhou Xinyue and his colleagues conducted a simple experiment using a game that allows players to redistribute income between two people. They describe the results inside Human Behavior Nature. The players were shown pictures of two people and told that one has been randomly given a large amount of money and the other a small amount. Then we asked the actors if they would be willing to allow the money to be distributed under two basic conditions: one, if the redistribution leaves the “rich” person still richer than the other; and two, if the redistribution reverses the effect and leaves the “rich” people poorer than others.
Zhou and colleagues conducted experiments on subjects in China and continued their experiments with Indian and Caucasian subjects through Mechanical Turk. They found that the answers were surprisingly uniform: 76.87% of people wanted to redistribute money if the rich person was richer than the poor person, thus keeping “social status” intact. But only 44.8% of people want to redistribute the money if it means changing the terms of “rich” and “poor” people.
Zhou and his colleagues identified this bias in people’s responses as an artifact of “situation-reversal aversion,” or the fear of confusing situations. When the researchers tested the children, they found that the aversion to change of position did not develop until the children were 6-10 years old, which suggests that this aversion is learned culturally as the child grows up (the desire to redistribute wealth develops around the age of four).
In addition, the Tibetan herders who participated in the study had a higher level of situational aversion than the other subjects. This also suggests that the behavior is cultural: the Tibetan group comes from a traditional, traditional society with less market integration than other groups, so their responses are different.
Many people seem to have two conflicting beliefs. We don’t like wealth inequality, but we also don’t like to change social conditions. Zhou and his colleagues say this may explain why it is difficult for people to solve problems with inequality.
What is particularly surprising is that this research shows that people do not like to see it another person fortunes reversed. So this is not about selfishness or protecting what is yours. It is some fear driven hierarchy that goes beyond greed.
Economists Gary Charness and Marie Claire Villeval write in a related article for Creation that status reversal aversion may be related to “loss aversion,” a syndrome where “departure from a . . . situation has a more negative effect on motivation than a promotion of effort.” They added:
Third parties can anticipate the strong impact of displacement and the negative social and economic repercussions of the status quo. Status regression anxiety can result from fear of violence and anti-social behavior from primarily wealthy individuals who will suffer from reduced wages and loss of status.
Seeing someone lose a position is so disturbing that it outweighs other thoughts. We would rather keep the existing regulations, even if it means that nobody gains anything. This may also help explain why the poor often vote for programs that benefit the rich.
Zhou and his colleagues suggest that our prejudice may be moral, too. “One reason participants may feel that hierarchical order should be preserved is the belief in a just world,” they wrote. Even though the participants knew that the money was chosen randomly, they “may think that those who receive the highest tax are the ones who deserve it.”
Either way, we’re stuck with a bunch of people whose cultural norms have taught them to fear sharing wealth if it might upset the social order. We want income equality, but we don’t want to rock the boat. Is there any way out of this argument?
Getting rid of the situation is not a problem
One promising result of Zhou and his team’s experiments was that most of the subjects did not react to the conditioning. When given the opportunity to redistribute money so that the “rich” person has the same amount as the “poor” person, roughly 76% of people choose to do it. This is essentially the same number you want to redistribute as long as the position is preserved. Zhou and his colleagues concluded, “We found that participants were opposed to status changes but not opposed to status elimination.”
This is a tantalizing discovery for people who would like to eliminate income inequality. He suggests that people may be more open to reducing income inequality if there is an assurance that one’s wealth cannot be reversed. “Our level of equality shows that people will accept the elimination of higher positions,” wrote Zhou and his colleagues. “It’s only when winners become losers and losers become winners that people disagree.”
Human Behavior Nature2017. DOI: 10.1038/s41562-017-0142 (About DOIs).