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UMD Research Reveals How American Elite Influence the Income Gap

Experiment spotlights how those with most privilege, power emphasize efficiency over equality
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AdamG1975/istockphoto.com

As the 2016 Race to the White House heats up, concerns about income inequality fuel political debates across the country. However, research conducted by Pamela Jakiela, an assistant professor in the University of Maryland Department of Agricultural and Resource Economics, and her co-authors at Boston University, the University of California at Berkeley and Yale Law School, suggests that those with the most influence on policy and politics – America’s elite – aren’t truly interested in closing the income gap. Their findings appeared in the journal Science on September 18th.

The researchers invited three very different classes of Americans to play what’s known as a “dictator game” designed to measure attitudes towards equality. Participants were divided into the following categories:

1)      American public at large: constructed using an internet-based pool provided by American Life Panel

2)      Intermediate elites: Researchers considered two groups of intermediate elites: undergraduates at the University of California at Berkeley and a subset from the American Life Panel filtered to hold post-BA degrees and enjoy household annual incomes of more than $100,000

3)      Extreme elite: made up of subjects exclusively from the student body at Yale Law School, many of whom will go on to assume positions of power and influence in U.S. politics and policy.

Working with real dollars, participants in all three classes were asked to distribute a pot of money between themselves and an anonymous other person. Each subject could keep or redistribute as much of her budget as she liked, but with a twist: the researchers varied the cost of redistribution. In some cases, giving was expensive, so that every dollar a subject sacrificed brought her anonymous beneficiary as little as a dime. In other cases, giving was cheap, and every dollar sacrificed contributed as much as ten dollars. Those who care about efficiency tend to give a lot when giving is inexpensive, when giving up one dollar means increasing the payoff to the other person by several dollars. In contrast, those who care about reducing inequality tend to keep payoffs relatively equal no matter what it costs in terms of average payoffs.

The behaviors of the three subject classes participating in the experiments revealed stark differences in attitude between ordinary Americans and the elite when it comes to economic justice. The researchers discovered that the Yale Law students who made up the “extreme elite” in the experiment were dramatically more concerned with maximizing efficiency than with reducing inequality, even though they overwhelmingly identified as Democrats (siding with the party that claims to represent economic equality in partisan politics).  The two “intermediate elites” fell somewhere in between.

“Regardless of party, it appears that the policymaking elite is significantly more focused on efficiency than on minimizing inequality relative to the U.S. public at large,” said Jakiela. “Our results offer a new explanation for the lack of policy response to the rise in income inequality in this country.”

The study suggests that, whatever the outcome of the next election, those likely to take office may be dramatically less concerned with reducing inequality than the typical American voter. 

Jakiela’s co-authors include Raymond Fisman from Boston University, Shachar Kariv from the University of California at Berkeley and Daniel Markovits from the Yale Law School. 

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