Unemployment Rate

Employed People Prefer to Keep the Money They Earn, Says New Study

Does unemployment teach people that the rewards of life are largely due to luck?

|

EarnedIncomeDreamstimeIqoncept
Dreamstime: Iqoncept

A startling new study* just published in the Proceedings of the National Academy of Sciences probes "the moral consequences of becoming unemployed." The researchers led by University of Nottingham social scientist Abigail Barr use economic games to see how the views of 151 young European adults regarding how money should be distributed change depending on how their employment status changes. In the first year, 85 participants were employed and 66 were full time students. In the second year, 59 participants were still employed, 26 unemployed, 51 full time students, and 15 former students were unemployed.

The participants play an anonymous four player distributive justice (DJ) game in which the researchers endow each with different sums of money—€16, €12, €10, and €6—and each player knows how much the others got. Before the DJ game, some participants had engaged in real effort task that determined the size of of their monetary endowments—the more successful received €16 and the less €6.

Once the play was over, each participant was given a tray divided into four sections. One section belongs to him or her and the other three sections belong to fellow participants. In two-thirds of the cases how the money is divided up in the trays is related to how much work each participant did and in the remaining cases the amounts are allocated more or less randomly. Each participant can decide how to divvy up the money between himself or herself and the other three players. Once all of the participants have made their allocation decisions, the decisions of one, randomly selected, determine the final payoffs.

The goal of the experiment was to see how the employment status of participants who affect how they would choose to divvy up the funds. So what did they find? Phys.org reports:

"We found that the employed people tended to re-distribute the money less when they knew people had earned their money in the first part," asserted researcher Luis Miller from the School of Economics and Business at the University of the Basque Country. "By contrast, they tended to re-distribute it almost equally when they knew that the initial distributions were just due to luck."

In other words, the researchers found that people who are employed or full time students want to keep what they earn but tend to share what comes by luck. But what happens when they become unemployed? Phys.org more broadly notes:

In general, both people in employment and those in full-time education believe that people should be allowed to keep most of what they earn and that it is OK for those who work harder or who are more productive to earn more". Miller went on to say, "When people become unemployed, our study indicates that they let go of this belief. They put a higher value on the redistribution of money, which, in social terms, would mean higher taxes on those earning more in order to fund increased public spending."

"In our study," explained Miller's colleague Paloma Úbeda, "we didn't ask the participants about re-distribution, taxes or public spending, as the responses to questions of this type could be biased by the self-interest of the interviewees. So high earners who look after their own interests would prefer lower taxes, while low earners who also have their own interests in mind would want higher taxes. What we were really interested in was understanding how, when becoming unemployed, people change the way they see what is fair in terms of re-distribution, in other words, whether they change their moral values. We found that they do; when becoming unemployed people change the way they think about fairness and re-distribution."

In their PNAS study, the researchers observe:

The finding that becoming unemployed erodes individual acknowledgment of earned entitlement can be explained with reference to dissonance reduction. On becoming unemployed, individuals who previously adhered to the value of earned entitlement let go of that value instead of either: enduring a decline in material well-being; or receiving resources to which they do not feel entitled and enduring the psychological effects of the resulting dissonance. In turn, the finding may help to explain why, especially following the financial crisis of 2008, young people are disengaging from the labor market; on becoming unemployed, individuals let go of the value of earned entitlement and, thereby, let go of one of the motivations for finding a new job.

The researchers suggest that …

…we need to establish whether unemployed individuals have to reacquire the value of earned entitlement before effectively reengaging with the labor market. Then, assuming they do, we need to investigate how this process occurs and whether and how different interventions enable the process.

Does unemployment teach folks to become fatalists who believe that the rewards of life are largely due to luck? And then vote to redistribute those rewards from the lucky to the unlucky?

*sarc.

Hat tip: Mark Sletten.

NEXT: God hates flags? Protesters fight prosecution for displaying American flag outside Westboro Baptist Church

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Goddam…. we definitely needed a scientific study to establish this fact.

    1. Hey it might help to win over the IFLS crowd. =)

      1. I think the basics would be more appropriate for that crowd; pictures of people with jobs, coloring books with picture of science-y stuff, maybe ‘grow’ a potato in a cup… that sort of thing.

    2. Hey, I’m just glad it was done in GB and with Euros, not here and with [my] tax $$.

  2. People do indeed prefer to keep their own money. But on the other hand they don’t care if other people’s money is being taken away by the government.

    1. Are you saying you don’t care if other peoples’ money is taken away by the government?

      1. That’s right.

        1. Not me personally but it’s a trend I see with people. They will try and get all the tax deductions when it’s time to pay the government but get angry when they hear how GE “avoided” paying taxes.

          1. And, there’s also cognitive dissonance. Having dinner with friends and friends of friends over Christmas. One of them was a Bernie supporter who lamented that it was hard to sell socialism in America.

            Who else was at dinner? Glad you asked: it included the couple for whom she used to work as a nanny. The wife is a high-level analyst at a private hedge fund and the husband is the co-founder of another hedge fund. They’re not millionaires but they’re very well off. They are also very generous to friends and former employees.

            So I was sitting there listing to the Bernie supporter and thinking she just didn’t understand that, if Bernie got elected, his policies would rape this couple. She. of course, figured it would be “the [anonymous] rich” who took it in the shorts.

            1. I have a friend who is a huge progressive and always rants about how the rich aren’t paying their share. She started working at a hedge fund and got a generous bonus after a couple of months working there and was appalled at how much the government took out of her check. Her boyfriend (who is also a libertarian) opined that she shouldn’t be angry since she vote for politicians who preach wealth redistribution and high taxation.

              She fucking flipped her shit at her boyfriend but it was great seeing the cognitive dissonance.

              1. It’s mind blowing to see people who can’t put two and two together. It’s the same with all the TSA stories that used to be floating around.

                1. Seems like these stories involve progs viewing situations being about the money, as opposed to being about people. The money simply needs to go “here”–no person involved (because it just happens, “government is just another name…”).

                  Opposition to where the money needs to go is intrinsically about people; specifically, the ones thwarting justice/help/common sense. The only face they can conceive being attached to the situation is that of an opponent.

                  Once they have their money taken, they suddenly put a person (themselves) into the equation, but are completely unable to do this when it involves another human being.

          2. Don’t worry about Hugh, he just inserts comments he thinks are clever. Best to just agree and let him feel smug.

            1. What are you talking about?

              1. Never mind.

            2. I’m just curious about people who say stuff like “people don’t care about etc etc.” Like, do they believe that they are empathetic moral agents while everyone else is some kind of uncaring beast, or are they actually able to access other peoples’ thoughts and know for sure that they have no fucks left to give?

              And your comment is a great example of the same thing. You obviously have some kind of remote access to parts of my brain where I’m posting just to show off how awesome I am, parts that I didn’t even know existed. I just want to understand how widespread the ability to see into other men’s souls is, and why I lack it.

              1. I’ve been training with John. I’m just now starting to get the hang of it.

              2. I should have said that my observations came from other people I know who call themselves liberals and progressives. Also, what I wanted to say if I didn’t say it clearly was that of course people want to keep their own money but have no problem with voting for politicians who promises to take other people’s money to fund programs they agree with.

          3. You’re talking about wealthy liberals.

        2. These comments have already been used in another thread. Can’t you afford NEW comments? You must be unemployed Socialists!

  3. the views of 151 young European adults regarding how money should be distributed

    Well, money shouldn’t be distributed at all. It should be earned.

    1. Look, money wouldn’t even exist if not for the government. It’s perfectly reasonable that they decide how it’s distributed.

      1. You left out sarcasm intended, right?

        1. Of Fucking course he’s kidding. wTf!

      2. Which is why bitcoin must fall.

    2. Obviously them being European tells you that their antipathy towards having money taken from them is nothing but naked islamophobic racism.

      /dalmia

  4. Want to meet a girl? come on http://goo.gl/mxiosK
    the Best adult Dating site!

    1. Do you accept Bitcoin? Because that’s a spambot I can get behind.

      1. Do not click this link at work!

        Spambot is a sabatuer.

      2. You like the feel of steel, huh?

  5. Predictable result:

    “The solution, of course, is to create a jobs program to teach unemployed individuals the value of earned entitlement so that they may effectively re-engage with the labor market.”

    “Government hiring new job program managers. Government requires bigger budget to teach people value of earned entitlement. Taxes increased to pay for budget based on the justification that individuals who learn the value of earned entitlement are less of a drain on society and will earn more to contribute to taxes.”

    The cycle continues as they learn nothing from this study.

    1. Look, people wouldn’t know what to do with money or how to get a job if the government didn’t tell them. Embrace your betters and do what they think is best. After all, it’s worked so well this far.

    2. value of earned entitlement

      Insane. The phrase “earned entitlement” has so much control built into it. It’s the reason people think that working hard means they should have a comfortable living, irrespective of the actual value they create for others.

      1. Yeah, that phrase bugged me too. I guess they’re just trying to say “you’re entitled to what you earn” but given the nature of the study I’m sure it has some antagonistic undertones and it’s very nebulous, as you’ve pointed out.

        Maybe I’m just over-analyzing it.

        1. My impression was very similar to your own, Mustang.

          I have many problems with the design of this “study” by Proceedings of the National Academy of Sciences.

          Anecdotally, I have seen results similar to what the study purports to show evidence for – yet by no means are my conclusions scientific. There is a significant difference.

        2. given the nature of the study I’m sure it has some antagonistic undertones

          Maybe an “earned entitlement” refers to whatever portion of your paycheck the government decides you get to keep? Instead of just referring to it as “wages” or “income” like a normal person would.

        3. I would read it simply as saying that you are entitled to what you earn. Which I think we can all agree with. Though I suppose they could have some other implications in mind.

  6. I want that hidden, offshore money that you rich people have been stealing from me.

    1. Can I interest you in financing an expedition for Captain Kidd’s treasure?

      1. Would that be a virtual trove?

  7. OT: I posted a preview story about this earlier, but the Breakthrough Initiative announced a new program today, called Breakthrough Starshot. This joins Breakthough Listen and Breakthrough Message.

    The idea is to fund development of technology to enable an unmanned mission to Alpha Centauri, and eventually to send a probe itself. Seems like they are focusing on laser propulsion/light sails and a very small craft. I couldn’t get the live stream of the announcement to work, so I’m going off of the webpage and what else I’ve heard.

    I think this, and the whole Breakthrough Initiative program, is freaking awesome. Libertarian upshot: privately funded basic research!!!!

    1. Laser propulsion and lghsail? We gonna send the probe to new Scotland?

      1. Given that probe was probably not less than 1000 kg, you’d need about a 10 terrawatt laser. Which seems way more useful than lasing a silicon wafer with an aluminum foil sail up to relative velocities.

  8. Opinion: One hundred fifty one individuals from two European towns does not provide a sufficient sample pool for a scientific study.

    1. And what the hell is ?? I mean, come on, this is America.

      1. It’s a metric dollar.

        1. Bravo, well done.

        2. Brett L wins a shiny metric dollar for that one.

        3. Nice, Brett.

        4. It’s a metric dollar. socialist unit of labor.

          FIFY

          1. In other words, it’s a metric unit of socialist labor.

  9. So, the next time a socialist suggests that the evil businessmen want unemployment because it keeps wages down, remind them that socialists want unemployment because employed people want less socialism.

    1. In the ild Soviet Union, proles pretended to work and the Party pretended to pay them. In today’s modern society, they government prefers they don’t pretend to work or look for work, because it fucks with the unemployment rate.

      1. And that is why I prefer U6 or workforce participation rate for unemployment numbers.

  10. There are a large swathe of people who make decisions about redistribution based on self-interest. Who knew?

  11. Employed People Prefer to Keep the Money They Earn, Says New Study

    Next they’re going to spend $500 million on a rigorous study to determine, once and for all, what color the sky is, and another $500 million to determine whether or not water is wet.

    1. The sky is clear. Water is wet, but ice may be dry.

      1. Ice is generally dry, isn’t it?

        1. Frozen Gaia Poison is often referred to as “dry” ice because it sublimates, leaving no liquid behind as it changes state. Its like a comedy club for dogs in here. All I get is head tilts and eager expressions.

          1. Good, that’s what I was going for.

    2. The two studies show that the sky is wet and water is fushia.

      1. As usual, plaid is overlooked in the new study.

    3. it wasn’t just that, though – it was that employed people were also more inclined to let people keep the money they had earned – slightly less ‘duh’ dropping

    4. It’s not quite as obvious as that. But it’s no surprise either.

  12. “…distributive justice…”

    Well, this term isn’t chilling to the marrow of my bones AT ALL.

  13. Employed People Prefer to Keep the Money They Earn, Says New Study

    But they didn’t earn it because they didn’t build it. Liar-watha told me, so it must be true.

  14. Keine scheisse, Sherlock.

  15. I was unemployed for four months. What I remember is:
    1) I realized that I needed to show my value to employers, rather than expect something in return; and
    2) I grew really resentful of people who had jobs that I was qualified for, especially older people with lesser academic credentials.

    Which are somewhat opposing sentiments. But the first won over, fortunately. That said, I still usually feel sorry for people who are unemployed and willing to work, especially younger single guys (although I hated people feeling sorry for me). We live in a society where people generally define themselves and others by what they do (though I’d say that’s becoming less so). My sister was unemployed at the time as well, and people’s reactions couldn’t have been more different. There’s been a lot written about how unemployment changes you, so I won’t go on, but those were definitely the darkest times of my admittedly cis-white-shitlord privileged life.

    1. I was unemployed for a similar length of time. I recall being on the dole and hating it because it was inadequate to cover basic living expenses AND was reduced by what if any money I made working odd jobs or the like, which was a real eye-opener as to how jacked up our “safety net” system really is. I went from trying to find jobs I wanted, to trying to find any jobs at all, to trying to find any jobs at all while training myself for a different career.

      The short version is that after some time as a barista and a contractor I finally got into web development and have fared pretty well since. But the biggest thing I learned is that the point of the exercise is to Get. Money. If you can’t find a job, look for a different kind of work. If you still can’t find a job, think of something you do that people would pay for and hit the bricks. In a word, hustle.

  16. How do you teach unemployed people the value of “earned entitlement” ? I always figured a little hunger was a good teacher. No work, no food.

    1. 2 Thessalonians 3:10
      For even when we were with you, we gave you this rule: “If a man will not work, he shall not eat.”

      So St Paul is a heartless capitalist.

  17. an anonymous four player distributive justice (DJ) game

    Each participant can decide how to divvy up the money between himself or herself and the other three players.

    I see nothing of justice here. If I read this right, they are determining how much of their own money to give away, which means, essentially, charity.

    People are always more generous with windfalls.

  18. fatalists who believe that the rewards of life are largely due to luck

    I’m surprised Tony isn’t here, since this sums up his belief quite nicely.

  19. I read the summary differently than others did. I interpreted it as even people on the low end of the earned distribution respected that those on top had earned the money. If it was perceived as earned.

    If perceived as random, then they redistributed.

    The key seems to be that unemployed people factor luck into the earning. I have been laid off a couple times, and I have laid off people who were hard working and productive.

    Sometimes I got laid off for what I perceived as dumb reasons. Some other product failed. They had short term numbers to meet and would have to spend twice as much to replace me next year as to keep me. Stuff like that.

    In that scenario, you start attributing the opportunity to earn, in the short term anyway, as a function of both skill and luck.

Please to post comments

Comments are closed.