Morality, Economic Inequality, and Policy Responses

EconomicHistory_JacobBowerBir_B

A review of What We Deserve:The Moral Origins of Economic Inequality and Our Policy Responses to It, by Jacob S. Bower-Bir.

Continued interactions among human beings within complex societal structures may lead to varying distributions of economic resources. A shared vision of justice, which is in turn shaped by human repeated interactions, can justify potentially wide divisions in the society among the well-to-do and the relatively less fortunate. In other words, the resulting unequal outcomes may be acceptable for society, even if perceived as discomforting and distressing to many, for they may be deemed just and equitable to the majority. If inequalities are deserved, the source of ever increasing inequality is posited on strong moral grounds and as such may not necessarily require any corrective intervention.

This simple but powerful argument constitutes the core message of Jacob Bower-Bir’s PhD dissertation, comprising 7 chapters.

The main conceptual and theoretical issues underlying the research question are outlined in the introductory chapter.  The main source of data supporting the empirical investigations is also described: a large-N survey conducted on approximately 1000 American respondents that will feature in successive chapters.

In the Chapter 2, Bower-Bir first describes the nature and definition of desert as “the quality of meriting some rewards or punishments”. He then links, convincingly, the theory of social institutions and the diverse theories of justice to the more comprehensive notion of desert, suggesting that the latter has extraordinary and intrinsic explanatory and interpretative power, shedding bright light on each of these theories.

First of all, Bower-Bir suggests that “desert has all the hallmark of a social institution”. In particular, individuals definition of desert, as well as their assessment of social justice, define a set of morals that influence and constrain individuals’ behavior and define their expectations about others’ behavior. In other words, morals are social institutions, a statement that provides a theoretical justification for why people might follow the prescriptions of their morals, even if this is personally harmful.

Second, and most importantly, Bower-Bir proposes a novel treatment of desert as a unifying concept of the two most notable notions of justice: distributional and procedural justice. Notably, the choice of the bases and the associated objects of desert lies at the heart of distributional justice. Conversely, the question of whether and how the identified subjects get what they deserve, is related to procedural justice.

The theory of desert discussed within Bower Bir’s dissertation identifies three main elements and “basic ingredients” of desert condensed in the following sentence: who deserves what and why? The “who”, represents the deserving subject. the “what” represents the deserving object, and the “why” indicates the deserving basis.

Moreover, as Bower-Bir’s work posits, common distributional principles of need, equity and equality can be reassessed using desert conceptualization and jargon. Similarly, a clear spelling of the deserved objects as well as the deserved bases is needed for the operationalization of the above-mentioned distributional principles. For example, we can postulate a scenario in which only those individuals below a certain “survival” income threshold may get access to a specific cash transfer program under the need principle. Under the equality principle, however, the government may be willing to extend this transfer to every citizen unconditionally. Conversely, under the equity principle, the government may condition the receipt and the extent of the transfer on the assessment of individual marginal contributions to society (assuming that it can be measured).

Chapter 3 delves deeper into the individual definition of justice and of the appropriate bases of desert. What is deserved for Americans? And on what basis should economic outcomes be distributed? Jacob’s findings suggest that agency and personal responsibility of one own economic outcomes are crucial to justify the latter on a moral ground.  Americans of all backgrounds appear to value agency as a strong moral justification for merit. In particular, it is generally true that American respondents within the sample mostly prefer, as desert bases, those qualities over which they think they have control (hard work, attitude, ambition, and education among others).

Most importantly, there may be strong behavioral consequences. In order to check this hypothesis, Bower-Bir manipulates, in an online experiment, the perceptions that people have of their own control (and that of others) over economic outcome. Interestingly, and consistently with the importance of agency for individual notions of justice and desert, the results reveals how lack of responsibility over personal economic outcomes stimulates individuals to voluntarily redistribute resources. In other words, what is not deserved can be voluntarily alienated.

Chapter 4 zeroes on another regularity in people’s perception of justice and fairness, namely the need to reward individuals proportionally to their input. The idea that desert should be confined to distributions of economic outcomes based on equity principles has a long tradition, leaving traces all the way back to Aristotle (“treating equals equally and unequals unequally”). Similarly, a great bulk of game theoretic and experimental evidence described by Bower-Bir confirms the importance of this hypothesis.

In order to understand the issue better, Bower-Bir introduces the concept of a “desert metric” which translates the unidimensional desert basis into a measurable metric. In addition he discusses the notion of “levels of resolution”, referring to the translation of a specific desert metric into a set of economic outcomes (deserved objects). To what extent are differences in performance on the metric scale translated into different payoffs? The granularity of such “resolution” may be deeply intertwined with perceived fairness and justice which, presumably, vary a great deal across circumstances, location, and time.

Proportionality becomes a necessary but not sufficient condition to guarantee fair distribution.  Different levels of resolution may be required depending on the desert basis, the relative desert metric used, and the specific economic payoff allocated. At the same time, a different granularity of the resolution may be required along the same desert metric, showing that “tolerance for inequity is elastic”. Using experimental evidence within his large-N survey, Bower-Bir runs a simple experiment on respondents to check under what conditions people are willing to relax their aversion to inequity. The experiment asks respondents to assess whether, and how strongly, they support the idea of assigning the same letter grade to two students with slightly different performances. Findings suggest that respondents strongly prefer equity and a finer resolution of proportionality when the performance of the two students is closer to the median. In other words, respondents are more comfortable in assigning the same letter grade to relatively bad and good students.

After assessing what Americans consider to be economically just, Chapter 5 attempts to answer a delicate question: Is the economic standing of Americans the result of accurate compensation and remuneration of desert and merit? The investigation of the findings within the same large–N survey is indicative of the heterogeneity of the answers. Beliefs about fairness of actual distribution can be influenced, among other things, by personal experience (a member of discriminated minorities can be expected to report negatively on the degree of fairness of actual distribution) and by personal history of economic mobility (poor people that climbed up the economic and social ladder tend to see their outcome as highly deserved). Similarly, responses may vary quite substantially depending on whether Americans are assessing the deservingness of a group of rich individuals or of a group of poor ones. In particular, “the poor” are generally thought to be undeserving of their condition whereas no clear pattern emerges for “the rich”. Interestingly, judgments are affected and almost overthrown if respondents are asked to assess the deservingness of specific individuals rather than that of anonymous groups. As a matter of fact, American respondents seem to have very little doubt in deeming the fortunes of a well-to-do individual as deserved, even when information on their account is scant. On the contrary, the vision of the worthiness or unworthiness of a poor individual is more blurred and less assertive in the absence of more precise information.

Before the main concluding remarks, Chapter 6 looks closely at the seemingly contradictory behavior of Americans who concurrently dislike inequality and actively oppose redistributive measures that benefit them and harm the elite. In light of all the discussion related to individual assessment of desert and justice, it now appears clearer that moral norms shape the support of Americans for inequality-reducing policies.  Moral considerations allow individuals to simultaneously despise inequality (because it is harmful to them and to society as a whole) and to refuse to take remedial action. In particular we have come to understand that redistribution drives are halted when both rich and poor deserve their economic status. Equally, redistribution could be unfeasible in practice when the rich deserve their status and the poor do not. In the latter case no redistribution would be deemed morally acceptable. On the contrary, redistribution is accepted and implementable when neither rich nor poor deserve their economic status.

Bower Bir’s dissertation therefore speaks eloquently to the heart of this rationality puzzle of American respondents that have been disorienting scholars and researchers in social science disciplines. Moral considerations about the notion of justice may create complex social norms that guide and constrain people’s behaviors and preferences.  Our understanding of economic deservingness does influence inequality per se and, most importantly, influences policy proposals as well as their ultimate implementation. Bower-Bir’s work brings fresh insights on these important issues.

In addition, it is very common in social science to conflate the pure notion of desert with that of desert bases over which individuals have full control. In fact, examples of economic rewards conditioned on desert bases outside individual control are not uncommon, and can, at times, be even necessary.Bower-Bir argues, instead, that this hypothesis should be tested with actual data and with experimental evidence. Indeed, Bower-Bir’s’s large-N survey reveals, without assuming it, that Americans of all backgrounds do indeed value agency as a strong moral justification for merit. Most importantly, his experimental evidence suggests that undeserved economic payoffs can be voluntarily redistributed. To the extent that American politics appears to be mostly captured by the interests of the wealthy elite, as supported in recent authoritative literature, this may have interesting behavioral consequences. As the rich influence political decision making, only the undeserved portion of their fortunes can be distributed.

Furthermore, Bower-Bir’s analysis highlights the importance of context and information for moral evaluation and implicitly hinted at a substantial trade-off between the satisfaction of individual moral needs and the pursuit of aggregate welfare and well-being from the “social planner” point of view. For instance, unequal distribution can be morally accepted even if harmful for society as a whole, were the policy choice to satisfy the individual notions of fairness.

Finally, Bower-Bir’s novel treatment of desert as a unifying concept of the two notions of justice – distributional and procedural justice – opens fruitful avenues for future experimental investigations.  For instance, the existing literature has typically treated the two main notions of justice separately. Indeed, scholars have been attempting to pin down the independent contribution of each notion of justice on important outcome variables such as job performance, pay, and satisfaction; satisfaction in leaders; and organization commitment.

The notion of desert would stimulate the investigation of a similar set of issues within a coherent framework, without needing to resort to different concepts of justice. How would the consistency of the results change once we allow for multidimensional desert basis? How would different countries and cultures relate to the notion of merit and desert? My hope is that researchers interested in social justice, the evolution of moral norms, tolerance for economic inequality, and preference for redistribution, will use Bower-Bir’s work as a source of intellectual inspiration to answer a much broader set of interesting and crucial questions.

Salvatore Morelli
Department of Economics and Statistics
Center for Studies in Economics and Finance (CSEF), University of Naples “Federico II” salvatore.morelli@gmail.com
https://sites.google.com/site/salvatoremorelli/

Primary sources
The main source of data is a large-N survey conducted on approximately 1000 American respondents. At the same time, the findings in most of the chapters relate also to original survey experimental evidence and economic experiments.

Dissertation information
Indiana University. 2014. 219 pp. Primary Advisor: Elinor Ostrom.

Image: External Deltas, by Jacob Bower-Bir, April 2016. Figures based on sculptures by Amedeo Modigliani. Sketched hurriedly in Microsoft PowerPoint while in Beirut, Lebanon.

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