Rank-reversal aversion may be causing more social problems than we realize
arstechnica.com
arstechnica.com
Because that was never the problem with income inequality to begin with.
The problem isn't that one person makes $10,000 while another makes $40,000. Those people are both struggling. The problem is that one person makes $10,000 (or $40,000) while another makes $10,000,000.
Reversal never even enters into it. If you took $9,900,000 of the richer person's money and split it between 1000 poorer people, the richer person would still have more money. Even though that would imply a 99% tax rate.
Well, that.
But also the real real problem: Economic professors making up social theories by conducting a "simple experiment using a game" (and childish slides).
9,900,000 / 1,000 = 9,900
The 1,000 people would need to start with more than $90,100 before rank reversal occurs.
If I think it's close, then what the researched observed may kick in, even if it's no where near close.
Actually, plenty of revolutions intentionally did just that, and much, much worse (as in executing aristocrats and land owners and giving all of their possessions to the poor).
Whether that leaves the countries better or worse in the mid-term than places where the levelling wasn't done (Russia, China versus US, Europe) is something I'm sure can be long debated.
Explain to me, how is that a problem. Suppose someone invents a method to make lots of clean renewable energy very cheaply. They make a company and earn $10,000,000. Did they not deserve the fruit of their labour? Is that a problem?
[1] http://charris.ucsd.edu/articles/harris_salovey_2008.pdf
The idea that we live in a meritocracy, and intelligence and novelty are rewarded more than being a corporate drone.
We don't live in a meritocracy, but it's an ideal that many (probably a lot of folks who work in startups) would rather push towards: replace the "lucky" rich with the "deserving" rich.
But this argument assumes that financial incentives actually encourage and yield good work. Studies have shown this to be false. When you provide monetary incentives to achieve a goal, the outcomes are worse than the outcomes from people who pursued the same goals for no financial incentives.
Without financial incentives, people do work that gives them purpose and meaning, which ends up helping other people more than any financially incentivized goals.
Artists don't have a financial motives. They're often poor, and yet they continue to pursue their art. People will do things that give them purpose and provide them meaning, that will never change. But if the financial incentive is removed, you won't crowd the field with people whose only purpose is to make money.
People don't just have one motivation, you see. If I have a desire to do something but it isn't strong enough to follow through, other factors can motivate me to complete the goal.
Sure, some people will starve for art. Most of the time, that's not because they desire to become as skilled as possible, but because they desire social and moral superiority and associate poverty with status and acceptance in their community. I don't personally see that as any greater or worse than pure profit motivation, and see it as much worse than a motivation to earn money in order to accomplish other goals, such as feeding, sheltering and clothing family.
Agreed.
> I don't personally see [social standing motives] as any greater or worse than pure profit motivation, and see it as much worse than a motivation to earn money in order to accomplish other goals, such as feeding, sheltering and clothing family.
But we're talking about financial rewards that far exceed what's needed to feed, shelter and clothe your own family.
You initially mentioned the risk/reward calculation, and rewards certainly affect it, but suppose instead of incentivizing via rewards, we remove the disincentive of risk. You no longer have the exorbitant rewards attracting people who are just after money, but you still encourage innovation for those who have insufficient motive absent high rewards given the risks.
If you remove the risk, that changes the calculation too, definitely. That's much harder to do, though, than increasing the reward opportunity or the perception of reward opportunity. Do I believe it is worthwhile to move in that direction? Certainly, but it's frankly impossible to administrate that solution today.
I'm not convinced that's true. It hasn't really been tried, and we know that financial incentives make people's work worse through psychological studies, so it's frankly worth trying for that reason alone.
They deserve more compensation because their work is worth more. It is that simple. Not everyone produces the same amount of value - in fact, how much value people produce at work usually diffes by a lot!
Someone who shovels dirt by hand moves less dirt in a year than one person with machines in a day. The idea that everyone produces equal value is not only ludicrous, it is deeply toxic and removes any incentive for individuals to excel and solve problems in a productive and creative way.
Agreed.
> They deserve more compensation because their work is worth more. [...] removes any incentive for individuals to excel and solve problems in a productive and creative way.
How does that follow from your premise above? It seems you're also assuming that only financial incentives motivate people to do good work. Do you actually believe that's true? Because psychological studies have shown that people who things for financial incentives actually perform worse than those who do them for non-financial reasons.
So frankly the evidence doesn't support the premise that financial incentives are useful. So you have to justify that they are somehow necessary.
If the typical person making that amount of money had invented "a method to make lots of clean renewable energy very cheaply" then it wouldn't be a problem, but those aren't the people we see making that kind of money.
And when the money is made from dirty energy, or high frequency trading, or executives who deny employee raises to boost profits, or just good old fashioned interest on inherited wealth, people start to wonder what everybody else is getting in exchange for keeping society structured in a way that causes those people to make that amount of money.
No, the real problem is that the one making $10,000,000, (or ten billion), gets away with murder. Anything they do can be excused, and anything done to the one making ten thousand can be excused. Inequality as it pertains to those real social consequences of money is the problem, not who has how much of it.
"In addition, the Tibetan herders who participated in the study had a markedly higher level of rank-reversal aversion than other subjects. This also suggests the trait is cultural"
An all too common kind of sloppy thinking, which generally kills my desire to read any further. No such thing is suggested. The trait may be learned, or it may be completely hardwired, kicking in action between ages six and ten. Different populations may have evolved different inbred attitudes to equality.
When you have a preformed ideological conclusion then logic is the first causality in any study.
Probably the opposite of your intended meaning heh
How much more explicit do you need me to be?
I suspect it appears clear to you only because you share the author's preconceived and possibly subconscious notion.
That is not a non sequitur.
In relation to the article, I am certainly not falling into the trap of suggesting anything not really indicated by the data in case.
Personally, I most definitely am.
Having said that, whatever the cause of it is, the results might still be something we want to try to address.
I agree with the rest of your post, but here you seem to be reaching. Are there examples of behavioral/moral differences between human populations that are known to have a genetic basis?
Why would you assume human populations to follow a pattern distinctly different from all the rest of biology?
"...evolved different inbred attitudes..."
This refers to evolved in the sense of genetics. Of course human populations have different patterns of behavior. But the question is whether these patterns are cultural versus being genetic. My response above has to do with the genetic basis of behavior differences.
EDIT: Thousands of years may not be enough time to cause a genetic basis for differences in human behavior. This was the original objection raised by interfixus. The objection does not seem reasonable given the lack of evidence given for said objection in the context of interfixus complaining about the sloppy thinking in the article.
Are there any behavioral differences known not to have a genetic basis? Yes. When in Southeast Asia, I don't show people the soles of my feet (it's not considered nice, at least in some places). In Europe I have no qualms about showing people the soles of my feet. Behavioral difference. Yet my genes don't change when traveling from A to B.
> Why would you assume human populations to follow a pattern distinctly different from all the rest of biology?
What exactly are you claiming about "the rest of biology"? Are you confusing human populations that look slightly different from each other but belong to the same species with different species of, say, felines?
You say, "different populations may have evolved...". You don't present any evidence for this. You just state it as a possibility. It might be the case that god causes the delay in Tibetans. Is it the responsibility of the article to counter this possibility? The article gives a credible reason for the delay in Tibetans and if the reason is correct it reinforces the idea that it is cultural.
I assume the researchers know a lot more about the topic than I do. In my experience if there is a possible objection to a conclusion researchers have made that I can think of when thinking about the topic for a few minutes then I'm the one who is almost certainly wrong.
It seems like an alternate explanation is that people don't like to artificially pick winners and losers, but they're willing to lessen the gap between winners and losers if it's too big.
There are philosophical concerns about justice and utility in messing with organic selection mechanisms. Perhaps a fear of instability plays into it, but it seems like there are more nuanced narratives that can be applied as well.
Isn't that the same thing, just rephrased?
The study seems to be looking at the former type of social policy to the extent that it's looking at a social policy at all.
- 76.87% of subjects accepted a 25% tax rate intended for redistribution.
- 44.80% of subjects accepted a 50% tax rate intended for redistribution.
It's hard to infer much beyond that.
Perhaps they need to test for a larger number or more fine-grained tax levels between 25% and 50% and see if there is indeed a step change (or other sharp decline) in acceptability when it "reverses social order". Or if there is a smooth distribution curve based on tax rate, not relative position.
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Even if you take the results as intended, that subjects were considering social order and not tax rate, you still have to concede that this could be about "fairness" and not "rank". It shouldn't be surprising that a majority of people dislike redistributing more than is necessary to achieve equality. That helps explain the results with the children. Ages 6-10 is about where they start to understand "fairness" from the perspective of both parties [1].
Additionally, taking the tax perspective into account, "Person B" appears to be subject to a lower tax rate than "Person A" despite ending up with more money, which subjects would likely see as unfair.
[1] https://www.theatlantic.com/science/archive/2015/11/how-fair...
When someone is a herder, the only way to earn wealth is by working long hours, busting your butt day in day out, and being careful about what you have.
I'd wager their mindset is that they know the pain, effort, and time it takes to accumulate wealth so they're loathe to take it from someone else.
Except that the scenario was explicitly designed to make clear that the wealth in question was not a result of effort but was acquired purely randomly.
Or they believe in divine right / hereditary caste system. In fact a long established hereditary caste system was dominate in 1959[0], Thinking that some long standing social construct is simply going to evaporate is a bit naïve.
Seems a more succinct conclusion is that it's about fairness. Most view the economy as a zero-sum game, and we generally measure our standing in society relative to others. So, the idea of redistributing wealth to the point where relative fortunes are being inverted may violate our sense of fairness.
"What's especially intriguing is that this study reveals that people didn't like to see other people's fortunes reversed. So this isn't about selfishness or protecting what's yours. It's some kind of fear of upsetting the hierarchy that goes beyond greed."
The article then goes on to present possible hypothesis for this behavior.
The fact that I come from a broken abusive home and a really messed up difficult childhood is a secret I guard pretty closely. The day I started wearing nice collared shirts and very subtly encouraging/allowing people to assume I come from privilege like they do (like almost everyone reading this does), I experienced an incredible reversal in career momentum. It completely turned my life around.
Not only that, but it totally changes the calculus of what people are willing to pay you. If someone has nothing and is desperate, that means they'll be willing to work for less, and anything higher would be charity. Your expectation is that they will be happier with less, and that they will be thankful for it.
If you think someone's parents own a nice lakefront house and a yacht, and they're young and white and wear nice shirts like you do and live in the bay, well clearly that person wouldn't accept less than $140k base. Your expectation is that not only will they demand fair and competitive pay, but also that dollar figures all seem low to them because they've been around money their whole life, so you better offer them more.
I don't know if it's as simple as "rank-reversal aversion." I think it's much bigger and more complicated than that.
In the broadest possible terms: People as a whole profile and categorize each other, and those categorizations are reflected in nearly every aspect of how people interact with each other. Part of the outcome of that is a tendency to reinforce success in the already-successful, and a tendency to reinforce failure in the already-failing.
Sorry to hear that, but do you really think it's the perception of privilege? Isn't it more likely that you just started projecting the image of a competent pro that has his shit together, and people just responded to that? The only way to know for sure is to maintain your image while divulging your background. If your fortune changes, then you were right. Personally, I suspect people will respect you even more because you're even more competent and accomplished than your false image.
This reasoning vastly underestimates human empathy and intelligence.
as it stands the middle class really has no way of "trading places" with the upper middle class, who can always out-earn them.
a marginal tax rate above 100% would close this loophole.
yes this comment is sarcastic.
Humans are egalitarians and would prefer a classless society. Ants are Communists.
On human egalitarianism
http://www.overcomingbias.com/2012/05/forager-vs-farmer-mora...
Animals have status too. Various primates form stable status hierarchies in their bands. Chimps are a great example. Canine species do this as well. And other animals, too - all the way down to lobsters. Basically any animal with any intraspecies interaction has some concept of status hierarchy.
And like the animals, humans like their hierarchies - the hierarchy fulfills a psychological need, the way being in a herd makes a herd animal feel safe.
People like knowing where they stand. They like having a role to play and knowing others are playing their roles. Without a clear hierarchy people feel nervous, the way a dog acts out from anxiety when the humans don't take charge.
Some people are driven to climb the hierarchy but most just want a stable existence somewhere in the middle of the pack where they can "camouflage against the herd" and avoid being noticed too much.
Most people like security and dislike responsibility for hard choices. Having others of higher status to take on those challenges absolves them of the need to make such decisions.
Egalitarianism is definitely also a part of human nature, but it's as a psychological counterpoint to the status hierarchy. People want the hierarchy to exist - but they want it to seem fair and legitimate and they want people to deserve their positions. People only dislike a hierarchy that seems illegitimate according to their mental heuristic.
So no, humans would not prefer a classless society, and such a society can never exist. If it existed for a moment, it'd cease to exist the next since classes would instantly form along the various dividing lines between groups of different personalities, proclivities and capacities. Level everyone's wealth and you quickly just end up with the same distribution as before, as we've seen after various bloodbaths in China, Russia, etc.
The minimum wage is an old rally flag, but it affects the bottom 1% when the problem is the top 1%. It's not the difference between the 1st percentile and the 25th, it's the difference between the 25th (or even the 90th) and the 99.9th.
The policies to fix that aren't the "help the poorest" ones, they're the ones that help small businesses and help consumers. Trust busting, lower housing costs (especially middle class housing), reducing regulatory compliance (paperwork) costs on small business, government spending on infrastructure, municipal fiber, patent-free basic research funding, etc.
Minimum wage is a distraction from the things that would actually help.
I was skeptical when you suggested that it was that small, but the most recent Pew study says that only 2% of workers earn the federal minimum wage in the U.S. [1] But they go on to point out that 30% of American workers earn "near-minimum wage" i.e. ≤ $10.10/h. If minimum wage were increased to $9/h, that would probably affect the earnings of nearly all of those people.
[1]: http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi...
It's not enough to get the people at the 5th percentile to where the people at the 25th percentile are. We need to get the people at the 25th percentile to where the people at the 50th percentile are now, and the people at the 50th percentile to where the people at the 75th percentile are now etc.
Trying to lift up only the bottom is what hollows out the middle. We need to lift up the middle too.
I believe every additional $1 of income for the lowest income leveled created economic growth of $1.40 or something and as you got to higher income brackets it hit parity with $1, then finally was significantly less than a dollar.
There are very valid reasons to think that raising the minimum wage is worse overall for low-income earners, by locking marginal-skill workers out of the job market forever. There are more technical solutions supported by many economists (for example, the EITC) but they are more complicated to understand and don't make headlines.
Not all policy disagreement is pure evil, and you're doing yourself a disservice by thinking "everyone who wants to help the poor should be for a high minimum wage". Even if in the end you disagree with the logic, it's not a position held out of malice.
Clearly there's limitations to alleviating income inequality that can't be solved simply by the redistribution of wealth.
I'd say I'm right about this, so why isn't over 70% of the population in favor of eliminating the minimum wage?
Maybe because you're wrong?
Seriously dude. Saying "I'm right, so why doesn't anyone agree with me?", while throwing around words like "obvious", shows not intellect, but rather ideological chauvinism. There are many studies and actual experiments about this topic going back literally decades from around the world. I suggest you read about it from authors that you don't reflexively agree with.
It's also very important to remember that most people who manage wealth well, on the other hand, do so in a way that benefits those who do not, and as such retain their responsibilities as money managers because they are one half of a financially symbiotic system of exchange.
There are also a lot of social factors to consider that didn't necessarily (and understandably so) make it into the studies dependent or independent variable sets. The attractiveness of each party needs to be controlled for, as there is a definite bias to give money to those we find attractive. The age of someone is another control variable that needs to be accounted for, as the elderly are generally (and correctly, generally speaking) more adept at managing money, for how else would they have survived so long?
All in all, I think mostly what this tells us is that we are cautiously optimistic about the belief that those who have less in our social hierarchy are capable enough to have more, but that it's important to preserve and honor the way in which wealth flows because it flows in a way that has kept us progressing for millenia.
I would be much more interested in reading about how much wealth they believed should be distributed rather than simply if it should. That would give us more than a binary response from which to extrapolate data.
With more magnification from my Web browser, there are still 96 characters per line so have to use the horizontal scroll bars twice on each line to read it.
So, since I was interested in the article, I selected all of the text, copied it to my system clipboard, pasted it into a new e-mail in my e-mail program that reflowed the lines and used a larger font, and then read some of the article.
With 96 characters per line, apparently the Web site is determined, feet locked deep in reinforced concrete, with iron-clad rigidity, to discourage as many readers as they can.
Ah, since the OP is about psychology, the 96 characters per line and the whole OP is really just a psychology experiment?
Curious that a Web site would want to work so hard to discourage readers.
Apparently the default in HTML is to have the window width fixed and let Ctrl-+ increase the font size AND reflow the text to fit in the same, fixed window width. If the window does fit on my screen, then I can just hit Ctrl-+ a few times and have fonts nicely large so that I can lean back and read the text. So, it takes some work in HTML and/or JavaScript to ruin this good default behavior.
The Web page I mentioned is only one; the Web is awash with people using tiny fonts and packing a single page with all sorts of stuff. With the layout the page has, to have the fonts large enough to read would need a screen, say, 4 feet wide. Any wider and, then, instead of scroll bars would have to walk side to side to read the screen.
Newspapers partially solved this problem long ago: Newspaper columns commonly have only about 40 characters per line. For the Web, 50-60 is about the upper limit. 96 characters per line is too many, way, Way too many, for newspapers, books, PDF files, Web pages, or anything else.
I'd think that by now Web sites would notice that 96 characters per line was too darned many and cut it back, permit Ctrl-+ to reflow the lines, etc.
So, I tried to make an issue of the 96 here. People with screens 4 feet wide won't agree with me.