Equity trumps Equality in arguments about taxation

31Aug/11

Equity trumps Equality in arguments about taxation

It is more effective to advocate for progressive taxation using arguments about equity or deservingness rather than arguments about how unequal American society has become.

I have written about this before, using different data, but with renewed attention being paid to rising inequality, leading liberals to continue to push for rising taxes for the rich, I feel like it bears repeating, this time with different data. While most Americans might prefer a more equal distribution of wealth, when positing such a distribution without considering who worked harder or contributed more, I doubt any study could show that any large group of people actually care about sharing some good equally more than adhering to the principle of deservingness. People care more that people get what they deserve than if everything is shared equally. Indeed if anybody knows of such a study, showing the oppositve, please share it with me.

Below is a graph of questions asking "how wrong" certain violations of fairness principles are. For example, a violation of procedural justice concerns situations like a trial being decided with misleading information or a law being made without the input of affected parties (alpha = .77). A violation of "lack of punishment" would concern a person going unpunished for a crime (alpha = .78). A violation of equity/deservingness concerns a person contributing to society and not being rewarded or a bonus being awarded without considering the relative contributions of employees (alpha = .76). A violation of equality concerns some employees being paid a lot while others are paid very little or a child inheriting a lot of money while another inherits nothing (alpha = .89).

To me, the interesting thing is not that liberals care more about equality than conservatives,or that liberals care less about punishing wrongdoers. Both facts make sense but are almost self-evident if one pays attention to politics and current events. Rather, the most interesting thing about this data (and any other data where I've pitted equality/deservingness against equality), is that everyone, including liberals, believes that equity/deservingness is a more important principle than equality.

There are certainly caveats to this data, in that it's a limited sample and the conclusions are somewhat reliant on the questions I choose to ask. However, this is but one of many datasets we have collected which tell the same story...that equity concerns trump equality concerns. Moreover, I think this idea is quite "post-dictable" meaning that most people who really think about it, realize that they themselves, no matter how liberal they are, care more about equity/deservingness than they care about making things more equal. This article from the Atlantic blog sums it up nicely:

I think very few (completely misguided) people resent “wealth” per se. I don’t remember anyone ever begrudging Bill Gates’ wealth, either. When people resent wealth, more often than not the resentment is directed at how the wealth is accrued rather than at who has accrued it. In certain instances, the how and the who become one and the resentment oozes toward the individual. I’m thinking of the Paris Hilton’s of the world in this instance. Here’s somebody who has done nothing of substance whatsoever; her wealth was accrued by virtue of genetic lottery. But those instances where people resent a particular person for their wealth are, I think, rather rare.

So how can liberals argue for progressive taxation as a matter of equity rather than equality? One problem for liberals is that research on system justification suggests that conservatives are more likely to believe that wealthy investors are more like Bill Gates than Paris Hilton. I don't have data on this (though I hope to collect it), but one example that worked for me recently is to frame progressive taxation policies in terms of rewarding work, as opposed to investment. Conservatives value hard work and I might even go as far as to say, anecdotally, that the conservatives I know work harder than the liberals I know (see this book which is tangentially related). Yet, we live in a country where someone who works hard for a living pays taxes at a higher rate (the income tax rate) compared to someone who happens to buy the right stock or the right real estate property at the right time, and sells it later for a gain (taxed at the capital gains rate). Or someone who inherits millions, and lives off their investments, a la Paris Hilton. Hard work is penalized relative to profiting by owning things. Is that fair?

- Ravi Iyer

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Tagged as: equality, equity, fairness, procedural justice, progressive taxation Leave a comment

Old Comments (14) Trackbacks (0)

Dan
August 31st, 2011 - 06:13

Interesting. Other aspect is, rather than opposing hard-working rich people and (alleged) welfare scroungers, opposing hard-working poor people and hard- (or not so hard-) working rich people. I’m not sure about the liberal-conservative work difference, but the poorer you are, if you have work, the harder you work. In that case, it seems to be very much about equity and just rewards, though (I guess for obvious reasons) that’s never how this plays out in public debate.
Ravi
August 31st, 2011 - 22:28

I agree! Indeed, I think health care reform would be a much easier sell if it was seen as a way to give health care to the working poor (e.g. the guy who works 2 shifts at various fast food restaurants), as opposed to a way to “equalize” health care.
Jesse
September 2nd, 2011 - 14:55

Amazing the differences on equality/need! But isn’t the inheritance example more about equity, because deservingness is held constant, and yet one kid gets a lot and another doesn’t? If deservingness is the same, then equity IS equality. So the political differences might stem from perceptions of deservingness differences. Liberals might assume more equivalent deservingness between social classes/groups, while conservatives assume more equity and hence nonequivalent deservingnesses.
Ravi
September 6th, 2011 - 21:38

That’s a good point about equity and equality being the same when deservingness is held constant. However, the inheritance question loaded with other equality based questions, in a factor analysis, so I think most people think of that question in terms of the raw inequality present, rather than as a violation of equity, even if one could think of it in both ways. I think you’re right about attributions of deservingness driving differences too.
Andrew M
September 14th, 2011 - 16:25

It seems to me that there are at least two ways of viewing “deservingness”:
- Hard Work: The amount of effort a person puts forth.
- Results: The value that a person’s work provides to others.

I would guess that people use both to rate deservingness but weigh them differently depending on the situation and their perspective. From a producer perspective, most of us probably think that we (and family, friends, and others we sympathize with) work hard and should be paid according to our efforts. From a consumer perspective, however, few of us are going to pay a premium for a good or service just because the person who provided it worked hard to do so – rather, we care about how well it satisfies our needs or wants.

Consider a number of scenarios:
- One person works around-the-clock and on weekends at the office to get things done, but the quality of their work isn’t that great. Another person at the office just works 9-to-5 and takes plenty of breaks, but they get just as much done and at a higher quality. Who deserves to get promoted and earn more money? Does it matter if you’re one of the office workers? How about if you’re the boss?
- One student takes copious notes and stays up every night for a week studying for their final exam, but only gets half the questions correct. Another student barely takes any notes and doesn’t even look over the material before the exam, but answers nearly every question correctly. Who deserves the ‘A’ grade and who the ‘F’? Does it matter if you’re one of the students? How about if you’re the boss?

You could probably devise a number of scenarios like those and get people to answer differently just by framing them in a particular way. Maybe some people would weigh either hard work or results more consistently, regardless of how the stories are framed.

Have you already done any research on this? I’d be interested to know what the data would show.
Ravi
September 14th, 2011 - 16:40

Andrew….very good thoughts and I have indeed had that same thought that deservingness could be a function of hard work and/or of productivity. I do have one survey where I tried to disentangle the two and I’ll try to post those results soon. Thanks for the prompt.
Justin
September 28th, 2011 - 06:29

Another consideration when evaluating work vs. investment is risk. It seems that investment is often viewed as serendipity, particularly by liberals. Someone had money and it magically became more money. However, investment income (generally) comes with significant risk of loss. How does the view and understanding of risk play into this discussion?
Ravi
September 29th, 2011 - 22:13

That’s a good idea to explore. Though investment also has the benefit of far greater rewards, risk likely does play some factor in judgments of equity. I don’t have any data on that, but will make a note to try to collect some at some point. Thanks.
Tom
October 3rd, 2011 - 10:05

Since perceptions of equity and equality vary depending on political belief, perhaps, it would be more beneficial to take a specific scenario and contextually examine attitudes towards equity and equality.
Ravi
October 3rd, 2011 - 10:15

Tom, we actually did run that study where we gave participants one of 7 different scenarios and asked them how they would like to distribute some “good” (e.g. profits, grades, charity funding). The results were the same in almost every scenario, in that equity trumps equality for all groups, even as the difference for liberals is smaller than for conservatives. The only exception was for allocating use of playground resources for children, but perhaps children are somewhat deemed incapable of being responsible for their own deservingness? I’ll share the results of those studies more thoroughly soon. Thanks for your interest and ideas!
Tom
October 6th, 2011 - 09:00

I definitely look forward to more. I’m a mere Psychology undergraduate, and so am in total ore of your work as well as feeling a bit out of my depth – just a bit! My undergraduate dissertation is centered around moral judgments. Specifically, the notion that a depletion of cognitive resources may lead to less cognitive (utilitarian) judgments, implicating emotion and a move to non utilitarianism. Thanks for replying.
Tom
October 6th, 2011 - 09:01

I definitely look forward to more. I’m a mere Psychology undergraduate, and so am in total awe of your work as well as feeling a bit out of my depth – just a bit! My undergraduate dissertation is centered around moral judgments. Specifically, the notion that a depletion of cognitive resources may lead to less cognitive (utilitarian) judgments, implicating emotion and a move to non utilitarianism. Thanks for replying.
Matthew
November 22nd, 2011 - 00:42

Have you considered doing a study of what type of arguments are most effective in arguing against taxation?
Ravi
November 22nd, 2011 - 07:04

I haven’t explicitly done so, but I would guess that the same principle would apply in that arguing for less taxes on the basis of merit would work better than based on equality (e.g. a flat tax). Indeed, I think many conservative arguments against taxes are based on the idea that it is punitive towards productive behavior, violating the principle of equity.