An international team of researchers has provided evidence that people are very willing to
accept inequality if they have a small chance of improving their
status. "It seems that even if people believe they have just the
tiniest of chances to become the next Bill Gates, it's enough to
keep them tolerant of obvious inequality," co-author Dr Eugenio
Proto from Warwick University stated.
Press statement Warwick University
A study by Eugenio Proto, an economist from the Centre for
Competitive Advantage in the Global Economy (CAGE) at the
University of Warwick and two other co-authors, looked at
decision-making and how it was influenced by people's perceptions
of fairness.
Researchers set up a game between two people where one person
(the proposer) offers to split £10 between themselves and their
partner, with the proposer able to decide the exact amount he or
she is willing to offer.
If that amount is not accepted by to the second person (the
responder) then neither gets any money.
Known as an ultimatum game, this kind of set-up is frequently
studied by economists - but for the first time the CAGE experiment
introduced an element of inequality via an increasingly-biased
rigged lottery to decide who becomes the proposer, the stronger of
the two positions.
Greater acceptance of inequitable outcome
It makes sense that when people see clear-cut unfairness, they
are less likely to accept it - and this was shown in the
results.
When the opportunity to become the proposer was 50 per cent -
i.e completely fair - responders on average rejected an offer by
the proposer of £2.15 or less.
And when the chance of becoming the proposer was rigged at 0 per
cent - i.e complete inequality - responders rejected offers of
£2.96 or less.
But when just a one per cent chance of becoming a proposer was
introduced - i.e the lottery was still vastly rigged biased in the
proposer's favour - responders rejected offers of £2.53 or
less.
In other words the difference between having absolutely no
chance and having just a one per cent chance was valued at 43p
(£2.96 - £2.53) - proportionally much larger than the 38p value
(£2.53 - £2.15) given to the gap between 1 and 50 per cent.
Implications for society?
Dr Eugenio Proto, Associate Professor of Economics at the
University of Warwick, said he was surprised to discover this
quirk in human decision-making.
"When you look at it rationally, it makes no sense that people
are placing such a disproportionate value on that first one per
cent increase in opportunity. But that slight increase in fairness
seems to have some kind of symbolic meaning. It appears people are
happy to accept extreme inequality when they have this tiny carrot
dangled in front of them," Dr Proto stated.
"We've got to remember that our experiments are conducted in a
lab at a university, not in the real world which is far more
complex. But these results could shed light on why people living in
unequal societies aren't more vocal in rejecting unfairness. It
seems that even if people believe they have just the tiniest of
chances to become the next Bill Gates, it's enough to keep them
tolerant of obvious inequality," he continued.
Anirban Kar of the Delhi School of Economics, one of the other
two co-authors, added: "It makes sense that when people see
clear-cut unfairness in the system, they are more likely to reject
an unequal outcome than if the same outcome was generated by a fair
system. Participation in the system, surprisingly enough, even a
symbolic one (a modicum of voice) seems to have a significant
impact".
The research paper Everyone Wants a Chance: Initial Positions and
Fairness in Ultimatum Games was co-authored with Gianluca
Grimalda of Universitat Jaume I, Castelló in Spain and Anirban Kar
of the Delhi School of Economics, University of Delhi.