Human behavior under economic inequality shapes inequality

Does Human Behavior Under Inequality Worsen Inequality?

This work not only sheds important light on how inequality might differentially affect the rich and the poor, but it also gives us a view regarding how this might contribute to inequality in the first place, in a dynamic way. High-income study participants living in a highest inequality state [Gini coefficient = 0.53 (the District of Columbia)] kept about 70% of their endowment and sent the remaining 30% to their colleague in the dictator game. Such a behavioral pattern might sustain or even facilitate the level of the original inequality: the rich get richer. On the other hand, high-income study participants living in a lowest inequality state [Gini coefficient = 0.42 (the State of Wyoming)] kept about 45% of their endowment, and sent the remaining 55% to their partner. This behavioral pattern reduces the level of the original inequality. Using both survey data and experiments with online subjects from the United States, Côté et al. show that high economic inequality is itself a force that makes the rich less generous.(It’s worth noting that, with an average income of $82,314, the survey respondents were substantially richer than the average American household.) In short, when an additional resource is offered in the experiments, richer individuals keep more than half of it under the high-inequality condition, whereas richer individuals give away more than half of it under the low-inequality condition.

These results comport with another recent study, involving a different series of experiments using subjects playing a public goods game in dynamic social networks (9). In those experiments, high inequality led richer study participants to behave “exploitatively,” taking advantage of the poor in cooperation games. On the other hand, low inequality led richer participants to be fairer than poorer participants—a tendency that helps the level of inequality stay low. These findings remind us that people themselves are the agents in the real world who have been producing the observed level of inequality. People’s behaviors play an important role in increasing and decreasing inequality and, as shown by Côté et al. (2), the existence of inequality may lead people to behave differently.

One side benefit of these results (2, 9) is that they may help explain the puzzling variation in prior work regarding whether the rich play cooperation games in different ways than the poor: it may actually depend on the environment in which the rich person (and hence, research subject) is situated.

A further, unremarked-upon finding of Côté et al. (2) is that players were less generous when the stakes were high (a $500 raffle ticket) than low ($10), which is itself a key finding about the dictator game. This paper adds to the prior literature that suggests that the size of the stake affects how people play (9, 10). Alas, we do not know if the rich or poor responded differentially to a change in stakes from the analyses presented.

How Can We Make Rich People More Generous and Cooperative?

Inducing behavioral changes in rich people might offer an alternative approach to reducing inequality, especially when policy-based resource redistribution (e.g., progressive taxation) is not feasible or acceptable. Recent studies propose several approaches to instigating such behavioral changes. First, making the wealth of neighbors invisible (so that people no longer know who else is rich or poor) may lead people to stop engaging in social comparisons, so that rich–poor economic cooperation is promoted and exploitative behavior is suppressed (9). Second, less anonymous connections between rich and poor individuals may motivate the rich to share with the poor (11, 12). For example, another recent paper in PNAS showed that, in a dictator game, millionaires in the real world donated more (around 70%) to others when they were informed that the opponents were poor, and donated less (around 50%) when they were informed that the opponents were millionaires as they were (12). This idea relates to the fact that people are more likely to help another person when they witness the other person having a problem (i.e., when there is an identified victim) (13). Still, even as we increasingly understand these phenomena, more work is needed not only to understand some of the psychological mechanisms underlying these effects, but also to understand ways to apply these findings in real-life settings.

Figuring this out is especially important because those at the top don’t just make decisions affecting themselves, or even solely the people with whom they interact socially. They also make decisions affecting our whole society. For example, one set of experiments showed that elites in the United States were less fair-minded and more efficiency-focused than a diverse sample of Americans (14). Elites might internalize their private experiences and apply them publicly. However, high-wealth individuals are not always mean. They might only be mean when the circumstances are especially unequal.