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A public policy blog from AEI
Income inequality is a deeply contested issue in the United States today, thrust into the spotlight by the Occupy Wall Street movement’s protests against “the top one percent.” Is our national wealth improperly concentrated in the hands of a privileged few? In a properly ordered, just society, would wealth be spread more equally than it is in America today? Social scientists at Duke University and Harvard have attempted to answer this question. They argue that most Americans would prefer dramatically less inequality than currently exists. We think that they are reaching well beyond the results of their study. Here’s why.
Imagine that you can choose between living in two societies. In the first, everyone has roughly the same amount of wealth. In the second, there are people who are very rich, very poor, and middle class. If you choose the second society, you will be randomly assigned to one of the three wealth groups. Which do you choose?
If you don’t feel comfortable gambling your entire life away, then you’ll probably choose the society where everyone has roughly the same amount of wealth. The degree to which you “dislike” risk might determine which you pick, and since many people are quite risk averse, many will choose the more equal society. But does this mean that your vision of a just society is one in which everyone enjoys the same level of wealth?
The author of the op-ed in question, Dan Ariely, is a professor of psychology and behavioral economics. In a study, he and his coauthor draw on the famous philosopher John Rawls, who argued that “a just society is a society that if you knew everything about it, you’d be willing to enter it in a random place.” Rawls described this as “the veil of ignorance,” as it forces individuals to approach their decision from a neutral standpoint where they don’t know anything about themselves. Opines Professor Ariely: This is “really a beautiful definition.” Here’s what he did with it:
We described to people Rawls’ definition, the veil of ignorance and the idea they could end up anywhere. And we said: What society would you like to create? How much wealth? How would you like to distribute the wealth? And it turns out people created a society that is much more equal than any society on Earth. It was much more equal than Sweden.
So far, so good. If we were in the professor’s survey, then we would also want the more equal society. Why? Not because we believe that the more equal society is more just, but instead because “the idea” that we “could end up anywhere” is terrifying. If I could be middle class with certainty or have a chance of being either rich or poor then I would take middle class, not out of any sense of justice, but instead out of risk aversion over the fact that my wealth is being determined by random assignment.
Professor Ariely leaps a giant chasm of logic when he concludes:
So this suggests to me that when people take a step away from their own position and their own current state, and when people look at society in general terms, in abstract terms, Americans want a much more equal society.
Maybe. Or maybe they’re just afraid of being randomly assigned into poverty.
Assume for the sake of argument that under the professor’s experiment you would pick a society with equal wealth. Now let’s perturb that experiment slightly. Would you allow for some people to be a little wealthier and some people to be a little poorer if effort and hard work were rewarded? In other words, if you had some control over your level of wealth, as opposed to having it randomly assigned to you, would you be willing to create a society where not everyone had the same amount of wealth?
I don’t know about you, but we certainly would.
The vision of a just society is one which has occupied philosophers since philosophy’s beginning. It is doubtless true that Rawls made a significant contribution to the theory of justice, but to boil his contribution down to a thought experiment of this simplicity does everyone a disservice.
The veil of ignorance (which is a method, not a definition) does not eradicate individual agency. A society can be imagined with that method that allows for entrepreneurship and a labor market which rewards effort and skills. A society can be imagined – and a survey designed – with that method that does a much better job of capturing reality.
And in reality, incentives matter. So does hard work. Asking people how they feel about wealth inequality in imaginary worlds where these things don’t matter and suggesting that their answers are relevant to the actual world is at best a bit silly. If it somehow convinces people that taking other people’s stuff is the easiest path toward a better world then it crosses the line from silly to irresponsible. Rawls would have known better. We bet that the participants in Professor Ariely’s study do too.
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