Can Inequality be fair? with David Rueda

Hosts:
Marius R. Busemeyer – Professor of Comparative Political Economy at the University of Konstanz and Speaker of the Cluster of Excellence “The Politics of Inequality”.
Gabriele Spilker – Professor of International Politics at the University of Konstanz and Co-Speaker of the Cluster.

Guest:
David Rueda – Professor of Comparative Politics at the University of Oxford and Fellow at Nuffield College; Senior Fellow at the Cluster of Excellence “The Politics of Inequality”. His research focuses on the political economy of redistribution, unions and social democracy, and perceptions of fairness and deservingness.

Episode Overview

Is inequality always seen as unfair? Or do people sometimes consider it justified? In this episode, Marius R. Busemeyer and Gabriele Spilker speak with David Rueda about fairness, meritocracy, and the political foundations of redistribution.

Drawing on large-scale surveys and innovative lab experiments, Rueda shows that support for redistribution is not driven by income alone. While material self-interest matters, perceptions of fairness and deservingness play a crucial role in shaping attitudes toward taxation, welfare, and inequality. The episode also explores how concerns about crime, insecurity, and social order intersect with redistributive politics — and whether investing in redistribution may ultimately be more effective than investing in punishment.

Episode Highlights

Fairness, Merit, and Self-Interest

• Inequality is more likely to be accepted when it is perceived as the outcome of effort and merit rather than luck.
• Support for redistribution reflects both material self-interest and normative beliefs about fairness.

Information and Inequality Perceptions

• Survey experiments show that informing citizens about high levels of inequality increases support for redistribution among the poor.
• Among the rich, the same information increases polarization: some become less supportive, others more supportive.

What Happens in the Lab?

• Participants perform a real effort task and earn income, which is then subject to taxation and redistribution with real monetary consequences.
• Procedural fairness matters: affluent participants are more supportive of redistribution when the poor have worked but were disadvantaged by luck.

Redistribution vs. Policing

• In a second stage, participants can invest either in redistribution or in policing to deter theft.
• When the rich underinvest in redistribution, they later spend more on policing.

Implications for Welfare State Politics

• Support for redistribution among the poor is relatively stable; shifts among the rich are crucial.
• Perceptions of work, merit, and deservingness strongly shape affluent voters’ preferences.

Links & Further Reading

More about the Cluster of Excellence “The Politics of Inequality”: www.exc.uni-konstanz.de/inequality

· Further information: 

o   Fetscher, V. and Rueda, D. (2023): “For Richer and for Poorer: Income, Perceptions of Inequality and Support for Redistribution”. Preprint. 

o   Rueda, D. and Stegmueller, D. (2019): “Who Wants What? Redistribution Preferences in Comparative Perspective”. Cambridge University Press.

o   In_equality Colloquium with David Rueda: “Crime or redistribution: Fairness, effort and income”. 8 Octobre 2024. 

Contact: cluster.inequality@uni-konstanz.de

New episodes every first Wednesday of the month – subscribe and stay tuned!

Transcript

In_equality Podcast: Can Inequality be fair? with David Rueda

Marius R. Busemeyer:
Welcome to a new episode of the Inequality Podcast. My name is Marius Busemeyer. I'm a professor of Comparative Political Economy and Speaker of the Cluster of Excellence “The Politics of Inequality” here at the University of Konstanz. And here is…

Gabriele Spilker:
Gabi Spilker. I'm a professor of International Politics and Co-Speaker of our Cluster.

Marius R. Busemeyer: 
As our guest today, we have David Rueda. He is a professor of Comparative Politics at the University of Oxford and a Fellow at Nuffield College. He has worked a lot on the politics of redistribution, especially on the role of unions, social democratic parties, but also more recently on perceptions of fairness and how that's related to the political economy of redistribution. And most importantly, he is here as a Senior Fellow of the Cluster of Excellence. Welcome, David, to this podcast.

David Rueda: 
Thank you very much for having me. I look forward to this conversation.

Marius R. Busemeyer: 
Maybe we can start with a with a rather broad and general question. In your work, what I find interesting is that you show that people, under certain conditions, accept inequality and even think it's fair to some extent, right? That sounds surprising. If you think about the politics of inequality and you don't know anything about it, you would think everybody hates inequality or considers it as unfair. But you actually find that sometimes people think inequality is fair. How is that possible?

David Rueda:
I think that the work I'm doing extends some of the things that we already know about fairness and deservingness. There is a general consensus in the literature on support for redistribution that when inequality is perceived as the result of a fair process, when it reflects effort and merit, people are quite willing to accept a certain degree of inequality. But when inequality is perceived as being the result of something unfair or something just luck-related then people are much more likely to want to mitigate that inequality and to take from the rich to give to the poor and produce a degree of redistribution. So that's part of what we do in terms of how can we explore why exactly or how these perceptions of fairness or deservingness affect people's support for the welfare state, redistribution, taxation, transfers to the poor.

Gabriele Spilker:
That would have been my question, David. Before we go on and ask about meritocracy and these kinds of things, could you explain to our listeners a little bit more what redistribution entails, which different facets you look at, and what you mean when you say, the politics of redistribution? What types of phenomena are we looking at?

David Rueda:
There is a very general way of thinking about this, which has to do with the general support or lack of support for the things that are redistributive that the government can provide, whether that is a welfare state, public services, health, education.

What we do is something much more concrete, which is common in the literature on the political economy of redistribution. We think about whether people support a system with taxes and transfers. It is a simplified world in which we all pay taxes into a general pool, and that money is then redistributed back to people.

This is a simple and elegant way of thinking about it, and it can also apply to services in the sense that we all pay for something, but some people benefit more from those services or use them more than others. In the most simplified version of this tax-transfer system, we all pay the same proportion of our income in taxes. The revenue is put into a pool and then distributed as a lump sum to everyone. This is redistributive because the rich pay more into the system than they receive, while the poor receive more than they pay in taxes. So, it is redistributive.

And the question is to what extent some people support this more than others. There are two themes that are part of the work we do when thinking about the motivations behind this redistributive system. One is material self-interest. There is something very intuitive about the idea that the rich do not benefit as much as they pay, while the poor benefit more than they pay. So, it may seem that support for redistribution is simply about income: who supports it and who does not. But then fairness comes in. There is a baseline related to income: in general, the rich support redistribution less than the poor in all industrialized democracies. Yet there is something else that is interesting and important to explain: to what extent do people deviate from that purely material self-interest? Is there something about perceptions of fairness and deservingness that matters? To what extent do people think inequality itself should be mitigated or not, regardless of whether they personally benefit from the redistributive system?

Marius R. Busemeyer:
So, these fairness perceptions basically go in two directions. On the one hand, if you think that inequality is fair because it is based on hard work, then it becomes a legitimization of inequality. But it can also go the other way around: the rich might say, it is fair that the poor also get something from the cake that we are producing here. Is that the way you’re thinking about this? Do the rich also think it’s fair that some of the poor, you mentioned deservingness, under certain conditions also get something from the welfare state? What does your research tell us there?

David Rueda: 
Absolutely. So, this is part of the question, right? To what extent is the fact that I perceive inequality to be fair or unfair related to whether I move away from this material self-interest baseline of either benefiting or not benefiting from redistribution?

There are several reasons why this perception of fairness may matter. It may be that we think it is fair to have a system that rewards the hardworking and the talented because that is good for everyone. This is an economy that is going to be efficient and productive. We all benefit from the fact that the people who work really hard are rewarded through their market income, and the people who do not work as hard are rewarded with less market income.

But then there are also more normative considerations, in the sense of whether I think inequality is a good thing or not, separately from whether I think it is good or not for the economy. We try to get at some of these things in terms of both perceptions of inequality and modifying people’s perceptions of what inequality is and seeing whether there are normative distinctions. We also use lab experiments that provide a very clear way of producing income in the lab, which we can then connect to whether you support redistribution more or less.

Part of this, again, is very much this idea that if you accept that there is a baseline in terms of redistribution that has to do with whether you benefit from it or not, and therefore that income is a very relevant determinant of support for redistribution, then there is definitely an implication, both in my work with Daniel Stegmueller and in the work that I’ve done with Verena Fetcher and now with Noah Bassin, that this normative conception, or the importance of fairness, may be different for the rich and for the poor. Because in some ways, for the poor, fairness and material self-interest work in the same direction. The moment I think inequality is something that affects me, I support redistribution because I would benefit from it, especially as the level of inequality increases. At the same time, if I have a normative inclination to dislike inequality or think it is unfair, that pushes me further in the same direction—toward supporting redistribution.

But for the rich, we see an interesting division between material interests and fairness perceptions. A lot of the action we observe in the data, meaning surveys that ask people whether they support redistribution and about their income, whether they are relatively rich or relatively poor, is among the affluent and the rich, because they can support redistribution more or less. There is substantial variation. This is perhaps where material interests and perceptions of fairness work in different directions. As a result, they affect some affluent individuals more than others and make them more or less likely to support redistribution.

Gabriele Spilker:
Before we go into the details of what you do in the lab and explain to our listeners what the lab actually is, I have one more question on the affluent and on the question of what type of redistribution we are looking at. I can see one additional reason that is more sociotropic in nature but not fairness related. The rich might support certain forms of redistribution, particularly education, not because of fairness concerns but because of a more broadly defined self-interest. They might think that more education makes the cake bigger for everyone, and that they will therefore profit as well, right?

So, there would be, independent of fairness concerns, which might differ across different types of redistribution, an additional self-interest story. Welfare benefits might be an area where they think, either I have these fairness concerns or I don’t. But with education, I see an additional self-interest that is not purely egocentric or narrowly individual, but more of a national self-interest argument. Is that something you can detect? Is that something you see in your work or in the work of others?

David Rueda:
Yes. I think that conceptually, there are different reasons why the rich may care about inequality in a way that seems to be fairness-related because it's not purely related to the materialist self-interest. But in reality, it could be a more complicated conception of their materialist self-interest. If we take a very simplified version of this, the affluent or the rich do not immediately benefit from redistribution because they pay more than they get.

Now, of course, as a number of political economy arguments have put forward, including the work of Marius and others, the moment that we move away from the present and we consider also the possibility of the future, the rich today may be concerned that they're not going to be rich tomorrow. And to the extent that they are concerned about the possibility of needing redistribution tomorrow, the insurance side of the materialist self-interest motivation for support for redistribution becomes quite strong. And therefore, they may support redistribution not because of any conception of fairness. They may think inequality is completely fair, but they think of redistribution today as insurance tomorrow, and therefore they support redistribution. That is something that is also connected to the sociotropic argument that you present because, of course there is the possibility that by looking at others and, others that I identify with and seeing whether they are more or less likely to become vulnerable to poverty or going down the income distribution in the future, I then take that to be a signal of what may happen to me, and I become more likely to support redistribution, not because I care about others or because I care about the fairness, but because I identify their situation as something that gives me a signal about insurance. But at the same time, this is difficult, right? So, this is one of the reasons why sometimes the surveys or observational data can tell us about these general patterns and relationships. But it's very difficult to get at what exact mechanism is working because, of course this is very difficult to distinguish from an argument in which I care about others.

And it's not that I'm understanding their situation to be a signal about my future, but it's really because I care about their circumstances, and it's purely we're part of the group and I care about them, and therefore I support high redistribution, not because of me individually, but because of others. Or it could be, again, that there is something that is materialist self-interest because I understand that when people of my group who are deserving receive redistribution, we actually produce a more productive, effective, efficient economy because none of the people I identify with would take advantage of redistribution or the welfare state because we're all fundamentally good people. And it's only when we think about non-in-group people and them getting this redistribution that some of this lack of deservingness factors may come in.

So, several things about the identity of others, whether the group is identified as something that is purely materialist self-interest insurance or redistribution-related or other motivations become important in this story. And therefore, digging deeper — both through more carefully identified surveys and through lab experiments — may therefore be valuable. 

Marius R. Busemeyer:
You also, in some previous work, look at the role of crime in all of this, right? So, maybe we could say also something about that because in a way it could also be that rich people support the welfare state because they are worried about crime, right? They think, if there's more inequality, there are more poor people around, so they might actually come and drop by my house.

And that's, of course, also one of these cases where you say, well, is that really fairness? Is it altruism? Is it some broader self-interest at play here? But you also work on this link between crime and support for redistribution. So, what does that tell us about this complex association?

David Rueda:
So, you're exactly right. A part of the work that I've done with Daniel Stegmueller before just looks at surveys and both in Europe and in the US and makes this argument that one of the reasons why the rich may support redistribution is material self-interested but not really related to the tax and transfer calculation, purely economic, how much do I pay and how much do I get from the redistributive system.

But it may be about one of the negative externalities of inequality. And if that negative externality of inequality is crime, right, if I as a rich person, perceive high inequality to be correlated with a higher possibility that I will be vulnerable to crime, then I may want to support higher redistribution because I think that limits the amount of inequality and therefore limits the possibility that I will be vulnerable to crime in the future.

And we clearly see this when we look at local levels of inequality, regional levels of inequality, and we look at people, the affluent, the concern with crime that the affluent may have, and it's both there is a connection between macro levels of inequality and how concerned they are about crime and then how important their concerns for crime are about supporting redistribution. And this is something that then we've done observationally on that side. And it's really an interesting side of this redistribution versus incarceration or policing as another possible solution for the affluent to protect themselves from the negative externality of inequality. And it's something that then we take to the lab to try to get at it in a more detailed way.

Gabriele Spilker:
Maybe it's time to tell us a little bit more about how you go about this in practice. So, you said repeatedly, sometimes you use observational data, this is survey data, sometimes you go to the lab. And I would just love to know, what is it that you do if you use observational data? That means you have existing survey data. What is it that you do then? And what can you do differently if you really go to the lab? Which is something that we as a social scientist do not do so regularly, unlike natural scientists or those who work on medicine or other related disciplines. For us, that's something more innovative and novel. I would just love to hear more about what you do exactly.

David Rueda:
So, I think, like a lot of political scientists doing political economy there has been a movement in political science towards what we call causal inference or causal identification. And which in my own case I still do a lot of observational work. I think that observational work, whether it is survey-based or its historical or its case studies or it's interviews, is incredibly valuable. It tells us a lot about patterns and about relationships. It's fundamental to what we do in political science. But at the same time, it has some limitations, like everything that we do in political science. And one of them may be that identifying the causes of a particular outcome is difficult because when we look at observational data, lots of things go together. And therefore, identifying the exact thing becomes that is responsible for variation in the outcome is complicated.

So, here is where the experimental side of either doing surveys or doing it in the lab comes in because it allows us to manipulate a particular cause artificially as if it was a treatment in the medical sense, right? For example, we randomly give a treatment to some people rather than other people that we are analysing. And then we can see because, of course, it has been randomly distributed that the only thing that varies in a systematic way is what we have manipulated, the treatment. And therefore, we can associate an outcome change to that treatment that we have provided.

I do this in my work in two ways. In my work with Verena Fetcher, what I do is to do surveys and to expose people to some information and some other people not to that information. So, what we're trying to do in that work is to analyse how important perceptions of inequality are. And what we do then is to update the information that people have about the level of inequality in their country in a random way so that some people in the survey will be given that information. Some people will be given information about something that is not inequality-related at all. And we can see whether updating people and making them conscious of the level of inequality in their country, which in our case, in the UK, means that telling people that inequality is higher than they thought it was, whether that then has an effect on the support for redistribution.

Gabriele Spilker:
And does it have an effect?

David Rueda:
Yes, it does, it definitely has an effect. And it has an effect that has a lot to do with the conversation we've had before. What we see in that survey experiment, is that there is a very different effect for the poor and for the rich. So, for the poor, which again, this is a survey then for the poor, what it does is to essentially reduce the variation in their support for redistribution and make it stronger. So, in here, because this normative side and the materialist self-interest side go together, people understand they benefit from redistribution, and they may also have normative conceptions about inequality, fairness, and deservingness that are modified by the fact that we're telling them inequality is higher than they thought it was so that the variation becomes smaller. Everyone becomes more likely to support redistribution, and their support for redistribution gets higher.

For the rich, however, it has the opposite variation effect, meaning that it increases the variation. So, for the rich, there are some materialist self-interested ones that when we tell them inequality is higher than they thought, they understand that means that they're going to have to pay more for redistribution than they would have to pay. And if they're purely materialist self-interested, then they become less likely to support redistribution. They don't like it. But for the ones that have fairness considerations, the fact that we're telling them that inequality is higher than they thought it was means that they become more interested in supporting redistribution because the payoff that you get in this other regarding normative way from that redistribution is higher, or perhaps because we cannot distinguish this materialist self-interest side from the normative side, and they become more likely to support redistribution. So, the average doesn't change that much, but the variation becomes much higher for them.

Marius R. Busemeyer:
But how do you do that than in the lab? This is the survey world again, so you can just give some people information, others not. But these things that we talked about, fairness, considerations, crime, how can you do that in the lab? Do you ask people to steal from each other, or how do they?

David Rueda:
Exactly. So, the difficulty in some ways with the survey experiment is getting us closer to knowing exactly why it is that people may increase or decrease their support for redistribution. And it is identified in the sense that we know that this information makes a difference because it has been randomly given to some and not others. But it's not getting close enough to the motivation of why it is that this could be the case or not.

So, in the lab, what we can do is to try to get closer to what the mechanism could be that is making the affluent and not the poor support redistribution more. So, what we do is we bring people to a social science lab where they then engage in an artificial society game with us, in which they come in and then they do an effort task that then determines what income they're going to get. And by income, we mean what is the payoff that they get from being engaged in this particular experiment in the lab. Some of them become rich because they've done well in the effort task. Some of them become poor because they have not done well in the lab.

But now what we can also manipulate is whether there is a level of procedural fairness in the system itself and therefore whether some people get their income because their effort and merit was high or low. And some people do the effort, but they get their income out of luck, which is something that then, again, we put together with the fairness discussion. And then there is a third side of the treatment, which is people who do not do any work, and they just get their income completely because of luck.

What we're trying to get at is to what extent, number one, does procedural fairness matter? Meaning the fact that I'm in a system that either everyone gets their income the same way, we all have to work, and then we get our income, or some of us work and don't get our income because of the effort that we've put into it, but completely out of luck. And some of us don't work at all. Some of us inherit their wealth or get their wealth out of luck. And it's a lottery. And they have this income, and they haven't worked for it.

Gabriele Spilker:
David, people play a computer game, right? Just that our listeners understand.

David Rueda: 
Yes. They do an effort task in our case is something that we call take out the trash or something like that. And it really is in a screen; you have lots of garbage that you have to put into a very small garbage can. So, it is a computer game in the sense that each garbage piece that you put into the into the can successfully become a point. And you get more and more points the more garbage that you successfully put into the can. And it's a very long one. We really want people to feel like they have done something that was not fun, but in fact work. You do when you do that for 12 minutes, you really feel like, "Oh my God this is a lot." And then, depending on how you've done and how many units and how many points you have, you are either in the poor or the rich side of things. If you are in the treatment, that is one in which you did the work, but now your income is being given by your merit, how well you did.

You could be also in the treatment that you did the work. You didn't know whether you were going to be in one side or the other. You did it sincerely hoping that your performance would be correlated with your income. But somehow then you are in the treatment in which you get your income out of luck. And that means that you've done the work, but there is no connection between your talent or your merit and the income that you get. Or you can be a group that comes into the lab later. You don't do any of this work. You just sit down. You are you're told what the task is, and you get to practice the task. But you don't do it, and you get your income completely out of luck. And now you interact with others, and a rich person interacts with a poor person, and they choose taxation.

Taxation that then is realized, meaning that whatever taxation we choose, a poor and a rich person, one of them is chosen randomly and then is realized, which means that taxation is the income that you made in the effort task is then taken away by that level of taxation. And there is a transfer. It's a pure tax, and then you give us transfer to both people. So, there is a sincere motivation.

Gabriele Spilker:
Because at the end of the day, they really get money.

David Rueda:
Exactly. You get real money. So, the interesting thing is that in this very artificial lab experiment, in which we are essentially talking about the difference between something like 12 or 14 pounds and 30 pounds, what we see is completely consistent with what we observe in surveys. So, for anyone having a suspicion that somehow in the lab, people are not going to care enough about getting 10 or 12 pounds versus 30 pounds, they do. And the rich — meaning the income-rich in the lab, the people who did well in the task and earned more than the others — behave systematically differently from the poor. And we see that fairness matters very differently to the rich and to the poor in the lab.

Marius R. Busemeyer:
I was just going to say, and you said that multiple times, it's an artificial thing. Isn't it also to some extent a problem that people also have personalities and lives and identities in the real world, and then they don't leave these personalities necessarily at the at the door, but they have their views on society and inequality in their mind. Then they play this game, and then they face a question at the very end. But of course, they had have had their lives before. Aren't you not worried that the rest of the personality will totally dominate whatever they do in that game?

David Rueda: 
So, we are worried about that. And, therefore, what we do is everyone, before they go into the lab, about two weeks before, they do a survey for us. And in the survey, what we do is to ask them the typical questions that we have in observational surveys about their, their out-of-the-lab income and their education and all the things that we normally ask, the socioeconomic characteristics and demographic characteristics that we ask in a survey. And we also ask questions that are related to some of the personality traits that may influence their behaviour altruism and risk aversion, being the two that are the most important.

For us, the important thing in some ways is to show, as you're saying, that this concern about people bringing into the lab things that are fundamentally unrelated to the things that we are artificially creating for them in the lab is something that doesn't affect the results that we see. And the interesting finding from our survey side is that neither your political ideology, when you respond to the survey two weeks before, or the income that you have in real life influences your support for distribution. Not even the support for the distribution question that you have in the survey two weeks before is correlated to what we do.

Once you're in the lab, you behave as a poor or rich person in ways that are not related to that, but very much related to what we are manipulating for you. The thing that does make a difference, however, is this personality trait. The personality trait influences it. It influences it in a way that we can control for them when we do the analysis of the of the lab. So, it doesn't influence our main findings, but it is something it is one of the few things that we carry from the survey that influences people’s behaviour in the lab.

Gabriele Spilker: 
And what does that all mean now for the broader politics of redistribution? What to make out of these lab experiments if we want to understand or design a system in which we want to potentially reduce inequality, or at least have it at a level that is fair for everyone, or that makes the best use of resources?

David Rueda: 
So I think that there are a number of things that we learn from the distributive side of our lab experiment that are important to know if we are to design policies that take into consideration how people form their preferences and how they then are willing or not willing to vote for taxation and for higher or lower redistribution.

One of them is that there is a difference between work and talent or merit. So, we see in the lab that, people respond to work in a very different way from when work is associated to merit. And this is something that is not completely straightforward always from the behavioural economics or the other political science literature that exists. The fact that in many of the things that we've done, people often treat work and merit as the same thing. So, if you have a system that rewards work and merit, and therefore that is one that would therefore be associated with less support for redistribution than one that is purely luck related. But in fact, work is something that is recognized. And when there is uncertainty about whether work is associated with income in a way that reflects merit, people then reward work with higher support for distribution.

And this is all about the rich and not the poor. We find, just like with the observational data that the poor are consistently have higher support for distribution and that a lot of the variation that matters in terms of support for distribution is about the rich. And that also matters to our political considerations once we take this to the politics of redistribution, because promoting a lower level of polarization between the rich and the poor when supporting redistribution, is something that matters to how sustainable redistribution can be. And in many ways, having the support of the redistribution for the poor being consistent, but finding what are the factors that make more of the rich support higher level of redistribution that also matters to a coalition that is for redistribution in many of these countries. 

Marius R. Busemeyer:
So you mean that the rich are more likely to support giving social benefits to the poor if they perceive them to be working hard?

David Rueda: 
Exactly.

Marius R. Busemeyer: 
So in the social policy literature, there's this debate about work incentives. And in Germany, we now have a big debate about the “Bürgergeld”, the social assistance scheme, where they increase the work incentives again after having actually reduced them for some time. So, if you connect your argument to the bigger debate about the welfare state, this would imply to some extent, if you make the welfare state a little bit more focused on promoting work, that should also increase the support for this among the rich and therefore potentially leads to a bigger welfare state.

David Rueda: 
Two things: I think that this introduces something about equality of opportunity rather than equality of outcomes in the sense that the perception of the fairness of the system matters to whether we think that work should be rewarded or not rewarded. But it is certainly the case that our findings also show that work is actually ambiguous in terms of its effect, because the argument that you're making is true, so as a rich person, I will support more redistribution for you if you work, but you have your income not determined by merit.

Because the important differentiation between work and merit is when someone works but receives income through luck, they have demonstrated effort, but not necessarily merit. If you work and you do badly, then me as a rich person think that you deserve what you get through the market, and therefore you don't deserve redistribution. The idea of somehow making things more dependent on work may not necessarily work the way that you were suggesting, because if work is associated with a perception that the outcome in terms of inequality is a fair one, you didn't work or you worked, but you performed badly in the market economy, then you deserve the low market income that you get. And that's exactly what we see in the lab.

What we see in the lab is that the same rich people exposed to one treatment, say: “You did the same work that I did, and you did badly, and I did well. You don't deserve redistribution because you just didn't do well in the in the effort task." But if people do the work, but then are given their income by luck, then the rich say, "You deserve."

Marius R. Busemeyer: 
But that's also this idea of meritocracy where people may confuse the outcome with the fairness of the process. For instance, if you, as a rich financial banker, say, "Well, I have a lot of money on my accounts, so I must have worked hard for that." That's, the criticism of meritocracy to some extent, right? That is confusing the outcome with the with the process. 

David Rueda: 
But also, we get a lot of text, meaning people justify their choices in the lab, and people are actually quite willing to explain why it is that they made the decisions that they made in the lab. And what we also find very consistently, and one of the strong results in our lab experiment is that everything is about the rich, but it is about the deservingness of the poor that they are interacting with. The rich always assume whatever outcome they're in, they always assume themselves to be effortful and meritful.

Gabriele Spilker:  
They even think that if they got it out of luck or inherited it?

David Rueda: 
Exactly. So, they always think, I was one of the lucky ones, but had I done the effort, I would have been one of the of the good performers. I consider myself a high-merit person. Therefore, you gave me my income through luck, but obviously had I been in the other in the other treatment, I would be rich anyways. So, it's all about the poor. It's all about the treatment of the poor. When the rich interact with the poor, it's all about what signals do I get from the lab that you are either deserving or not deserving. And then that hierarchy is, if you worked and you did badly, you deserve being poor, and you don't deserve redistribution. If you worked but got your income through luck, then you deserve redistribution because you worked. But you could be one of the high-performer ones. There is this procedural uncertainty that matters: if you worked but your income was determined by luck, then it remains unclear whether you are truly deserving or not. And if you did not work and your income was entirely determined by luck, then your situation appears to be purely luck related. In both cases, you may be seen as deserving a certain degree of redistribution, precisely because it has not been demonstrated whether you are a “deserving” or “undeserving” poor person. I think this is both interesting and important for how we think about the role of the welfare state.

But the second thing that we do in the lab then is that, as a surprise, after people have chosen redistribution and redistribution has been, materialized in terms of their payoffs, we offer the poor a chance to steal from the rich. And we offer the rich a chance to invest in policing, which will increase the probability of the poor being caught if they engage in stealing from the rich. And this is the second part of how to think about the negative externalities of inequality. But also more importantly, in terms of Gabi's question about the real-life connection of this, it really is about to what extent does policing and incarceration affect the level of redistribution and what balance between redistribution and policing would the affluent and the rich want?

We haven't done a systematic analysis of our policing and stealing side, we were writing the papers and the research that has to do with redistribution first. But what we find is really two kind of equilibria that are very much the Scandinavian versus American stereotypes. The rich who underinvest in redistribution in the first side of the experiment, then are very concerned that the poor are going to steal from them in the second side of the experiment. And they end up investing a lot in policing because they're very concerned about the possibility that the poor are going to steal from them. 

The rich that have invested a high amount in redistribution to begin with, then feel no incentive whatsoever to spend a lot of money on policing. So, when the second stage comes in, they do not invest as much in policing. And what we have is that, in reality, the rich end up spending more when they have tried not to support redistribution because they end up spending so much in policing, than what the rich that actually supported redistribution to begin with. So that at the end, they are in a in a better place. And what we also find is that the poor, in any of the conditions, are quite reluctant to steal anyway. So, the rich are very concerned about being stolen from, but the poor refrain from stealing both because it is normatively unacceptable and because they are concerned that, if they steal, they may lose part of their endowment if they are caught, especially when the rich person has invested in policing.

So, the rich can actually end up spend a lot of money in this policing side, in an American way. We know from observation data how incredibly expensive incarceration and policing is in the US and how, a more generous welfare state is cheaper.

Gabriele Spilker: 
So that's a very optimistic or potentially beautiful result at the end of the day. In the sense that by investing more in redistribution, everyone's life would be better, it would also be cheaper in the aggregate – and we all would potentially live in a nicer and better world. 

David Rueda: 
Yes, that is one of the optimistic findings from the lab experiment: when the rich are behaving in a more pro-restributive way then what you get is much less of a necessity to invest in policing, much less of a concern about crime as a negative externality of inequality.

And that this all makes sense in terms of the observational data that we see, once affluent individuals recognize the potential negative consequences of inequality, they are more likely to support redistribution. And that actually make the redistributive side cheaper and more effective for a society, than one in with the punitive side – you don't invest enough in promoting equality, and then you have to invest a lot because you feel very concerned. And there are, in addition to the costs of private security and residential segregation so that you're not as vulnerable to crime, things that also would promote a worse set of societal outcomes in many ways, not only the equality ones, but a much more polarized society.

Marius R. Busemeyer: 
Let's hope that this result holds up once you dig deeper into the data, but we're optimistic about that as well. Thank you very much for the time, David. It was a fantastic conversation. And thanks to the listeners for tuning in.

  (This transcript was created using AI.)