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Hide the gap?

from David Ruccio

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We know that economic inequalities have been increasing in the United States for decades now. And there’s been no let-up since the economic recovery was officially declared in 2009.

And many of us believe the grotesque inequalities we’re seeing these days have a corrosive effect on U.S. society. Not only are the majority being left behind; everything from the public infrastructure to political discourse appears to be deteriorating because of the growing gap between a small group at the top and everyone else.

A recent research paper by Akihiro Nishi, Hirokazu Shirado, David G. Rand, and Nicholas A. Christakis, published in Nature, suggests it’s not inequality per se that is socially pernicious, but the visibility of that inequality. (Readers who don’t have access to the original article can consult the report by Aimee Picchi [ht: ja].)

Nishi et al. set up a series of social cooperation experiments (participants were given the option of cooperating by decreasing their wealth in order to boost the wealth of their neighbors or of defecting by paying no cost and providing no benefits) in which they manipulated both the levels of inequality and the visibility of the wealth of other participants What they found is that

wealth visibility facilitates the downstream consequences of initial inequality—in initially more unequal situations, wealth visibility leads to greater inequality than when wealth is invisible. This result reflects a heterogeneous response to visibility in richer versus poorer subjects. We also find that making wealth visible has adverse welfare consequences, yielding lower levels of overall cooperation, inter-connectedness, and wealth. High initial levels of economic inequality alone, however, have relatively few deleterious welfare effects.

Importantly, in the high initial inequality situation when inequality was made visible, richer than average neighbors were less likely to cooperate than those who were poor. The result: the rich got even richer. However, the authors add, high initial inequality per se does not affect the degree of cooperation and may actually lead to greater wealth for society as a whole.

There’s a reason those on top—individual employers as well the country’s elite—try to keep information about economic disparities under wraps. They fear social cooperation will diminish if the word gets out.*

But, of course, the word does get out—through individual displays of conspicuous consumption as well as public recognition and discussion. (Even then, as many studies have shown, people tend to underestimate the degree of inequality.)

Since existing inequalities are now so large and increasingly out in the open, the real question is, why are people so concerned about inequality? Is it because, as apologists like to claim, those at the bottom are envious (and they should be satisfied with what they have or just work harder)? Or, alternatively, are people simply angry at the existence of growing gap between a small group at the top and everyone else—that such a gap violates the promise of fairness or “just deserts”?

Even as they try their best to continue to work and contribute, they realize they’re the only ones still committed to such cooperation. As a result, they want to see not just empty promises, but real movement in the direction of greater equality.

*Many years ago, my colleagues decided to share information about our salaries and were ordered by the dean at the time to cease and desist. Salary information was a closely guarded secret and, in his view, should remain so.

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