In today’s modern democracies, the public has the power to redistribute wealth – taking from the rich and giving to the poor – in order to bridge the gap between the economic inequalities that plague many nations. But for the most part, the top 1% remain super-wealthy, while the vast majority of people live a much more modest lifestyle. So why do voters in these democracies with great income inequality not attempt to redistribute wealth at a much higher rate, especially given that they maintain the voting majority? A new experimental study published in the Proceedings of the National Academy of Sciences might have the answer.
In an international study that is the first to examine how individuals change the distribution of wealth when confronted with clear-cut cases of favorable and unfavorable economic inequality, researchers from the University of St. Gallen in Switzerland and Stanford University found that, given the chance to “play Robin Hood,” most people showed little interest in making significant transfers of wealth.
“Participants in our experiment were willing to tolerate a considerable degree of inequality even in a setting where they have full control over the final distribution of wealth and there are no costs to redistribution,” says Michael Bechtel, an associate professor of political science in Arts & Sciences at Washington University in St. Louis and co-author of the study.
Their experiment sampled a representative group of 5,000 adults in Germany and the United States. Study participants were randomly selected to receive a pair of Amazon gift cards, with designated values of $25, $50, or $75. The participants were informed which card was theirs, and then given the option to transfer funds to or from the other card.
“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,” explains Kenneth Scheve, a professor of political science at Stanford and co-author of the study.
When cardholders had the ability to transfer the entire value of someone else’s card to themselves, most only took a small fraction of the total amount. Results also showed that the people most likely to take funds from a wealthier cardholder were often unwilling to transfer their own funds to a poorer cardholder. On the other hand, people more willing to share their money with poorer cardholders were less likely to take funds from those richer than them.
“This suggests that inequality persists in part because individuals are not averse enough to inequality,” says Bechtel. “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.
The results of this study show a new method for measuring individual preferences in willingness to redistribute wealth, presenting a potential tool that can be used to determine the likelihood that voters in a particular nation would support and enact progressive wealth redistribution programs. The study found that German participants were more likely to reduce favorable and unfavorable inequality than Americans – a tendency that corresponds with differences that mirror in real-life wealth transfer programs currently in place in these countries.
In general, this study gives a closer look into how people respond to inequality when given the opportunity to change it, and may help us better understand the political support for certain economic policies among different nations.