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Economic Disparity Better Than Upsetting Hierarchy

Most people and societies as a whole are not too keen on economic disparity, and the further down the economic food chain you travel the more aversion there is. However, it has become common these days that many countries and cultures are experiencing a widening gap between rich and poor.  

 

Since we seem to dislike economic inequality why are we supporting this almost across the world?   A recent cross-cultural study led by economists working in China suggests one possible reason: people are not willing to redistribute wealth if they think it will upset the social hierarchy.

Zhou Xinyue Zhejiang University business school professor and colleagues did an experiment by using a game which lets the players participate in wealth redistribution, calculating natural human behavior responses.  Pictures were given to the participants showing two people and told that one has randomly been given a large amount of money and the other a small amount. The two conditions were given for if each person would allow their money to be redistributed: One-If the redistribution leaves the "rich" person still richer than the other;

Two- If the redistribution reverses the roles and leaves the "rich" person poorer than the other.

The study was done on Chinese subjects as well as Caucasian and Indian participants through Medical Turk.  

 

Zhou and his colleagues found a surprisingly similar amount of 76.87% of people that were willing to redistribute their wealth as long as the wealthy person remained a little richer in the end, in turn keeping their social status.  

At the same time, more than 30% less people were willing to do this if the social status would change along with the wealth at 44.8%.

Zhou and colleagues term this "rank-reversal aversion," or a fear of upsetting hierarchy. When children were tested the study found that the rank reversal aversion didn’t start to take place until the children were between six and ten years old.  This discovery leads us to believe that the aversion is learned culturally, while the urge to redistribute wealth starts around four years old.  

 

It should also be noted that Tibetan herders who were studied had a distinctly higher rank reversal aversion level.  The Tibetan group lives in a culturally distinct very traditional society with much less market integration making a difference in their answers.

There is a fundamental contradiction in most people.  They have two very ingrained beliefs, one is we don’t like to upend social rank and two we don’t like unequal wealth.

More Than Greed

The study confirms people do not like any person’s money being taken from them.  So this means upsetting hierarchy isn’t about protecting what is yours or being selfish.  

Gary Charness and Marie Villeval wrote in Nature how rank-reversal aversion may be related to “loss aversion” basically rank demotion has a more negative effect than monetary loss.  They state Third parties may anticipate the powerful effect of demotion and potential negative social and economic spillover effects of rank reversal. Rank-reversal aversion may derive from a fear

Watching another person lose rank is apparently horrific enough that it outweighs everything else.  Humans would rather keep their hierarchy even if it results in nothing being gained, monetarily.  This could be a reason why poor people often vote for programs that benefit the wealthy.  According to Zhou this could be part of some kind of ethical reasoning saying "One reason why participants may feel that rank ordering should be preserved is a belief in a just world," they write. Even though participants know the money was assigned randomly, they "may assume that those earning a higher income are more deserving."of violence and anti-social behavior from originally wealthier people who would suffer from both reduced payoffs and loss of status.

What these findings ultimately tell us is that we now have a culture where it’s more important to keep people down or keep people from having enough money to live their lives than it is to upset one’s own or anyone else’s social standing.  We feel economic equality is very important however, we don’t want to shake up the social totem pole.    

Hopeful?

Zhou’s team does say that people aren’t afraid of eliminating rank entirely.  If given the choice to make the poor and the rich have the same amount of money about 76% of participants chose to do so, which is almost exactly the same amount who chose to redistribute the wealth so long as hierarchy was maintained.  

Zhou and his colleagues conclude "Our equality condition shows that people would accept the elimination of hierarchies."

SIMIALR POST

2017.07.27

The Human Aversion to Economic Equality