University of Cologne Department of Economic and Social Psychology The Egalitarian Ape: Welfare State Games and the Preference for Equality Sebastian Lotz University of Cologne Detlef Fetchenhauer University of Cologne, University of Groningen

2 The typical welfare state Economies & societies create wealth which most of them decide to partly redistribute Individual members possess different input factors (labor, capital, knowledge) and create a different amounts of wealth Redistribution through social security, taxes, donations Usually: Cost of Redistribution

3 Welfare state game EqualityWealth Rich1426 Middle Class1216 Poor102

4 Welfare state game Overall Wealth Equality 36 Wealth 44 Rich1426 Middle Class1216 Poor102

5 Motivational Factors 1.Maximization of individual payoff 2.Maximization of group payoff (overall wealth) 3.Maximization of equality (due to inequality aversion)  WOLF IN SHEEP‘S CLOTHING; Maximizing individual payoff can be justified by other arguments

6 Welfare state game Overall Wealth Equality 36 Wealth 44 Rich1426 Middle Class1216 Poor102 Maximization of Equality

7 Welfare state game Overall Wealth Equality 36 Wealth 44 Rich1426 Middle Class1216 Poor102 Maximization of Overall Payoff Maximization of Equality

8 Welfare state game Overall Wealth Equality 36 Wealth 44 Rich1426 Middle Class1216 Poor102 Maximization of Individual Payoff Maximization of Overall Payoff Maximization of Equality

9 Welfare state game Overall Wealth Equality 36 Wealth 44 Rich1426 Middle Class1216 Poor102 Maximization of Individual Payoff Maximization of Overall Payoff Maximization of Equality

10 Welfare state game Overall Wealth Equality 36 Wealth 44 Rich1426 Middle Class1216 Poor102 Maximization of Individual Payoff Maximization of Overall Payoff Maximization of Equality

11 What others found… As a social good, distributive justice is more attractive than overall wealth (efficiency)(Bolton & Ockenfels, 2002) Half of the people prefer the equal distribution in the game, the majority of them however is motivated by pure self-interest (Biniossek & Fetchenhauer, 2007)

12 Welfare state game EqualityWealth Rich1426 Middle Class1216 Poor102 Benevolent Dictator(Equality or Wealth?)

13 Experimental Design N = 216 students at the University of Cologne Between subjects design Random draw decided who‘s decision will be enforced in the group Accountability: Students were to write down their argumentation which was distributed among the group members  used for qualitative analysis 3 ECU = 1 Euro actual payoff, All benevolent dictators participated in a lottery being able to win, 200, 150, or 100 ECU Additional questionnaire

14 Results: Decision by Person

15 Results: Decision by Person

16 Results: Decision by Person

17 Results: Decision by Person

18 Self-rating of morality (7-point scale)

19 Who used fairness-based arguments?

20 Who used wealth-argument?

21 Hardly any deep thoughts…

22 Who used selfish argumentations?

23 Reasoning behind the results Social Intuitist Model Fast and automatic intuitions are the primary source of moral evaluations (Haidt, 2001) „Do no harm“ – heuristics (intention) People hesitate to harm small groups of a society even if a (large) majority benefits Inequality aversion (outcome) People disregard distributions which unjustifiably put some people better of than others (even if this would yield a Pareto improvement)

24 Implications Intuitive fairness/moral judgment is main determinant of the acceptance of socioeconomic policy (Haferkamp et al, 2007) Efficiency almost seems irrelevant to the people Decisions based on morality do not always seem economically right (repetition of the game, substantial losses of wealth)

25 Summary Distributions are not only selected due to maximization of individual payoff Accountability might reduce egoism, self-interest Generally „fair“ distributions are preferred even if this means to leave money on the table. Ambiguity of fairness is not seen In reality the fair solution is not as obvious, because wealth has to be compiled, individuals are unequally talented, etc.