Fisman and Markovits' bogus 'class war'

Economist Ray Fisman and law professor Daniel Markovits have published a piece in Slate alleging that the appeal of candidates like Donald Trump and Bernard Sanders can be attributed to a class divide in American political attitudes: "The rich place a much lower value on equality than the rest. What's more, this lack of concern about inequality among the elite is not a partisan matter. Even when they self-identify as progressive Democrats, elite Americans value equality less highly than their middle-class compatriots."

The authors base these conclusions on the results of a study they conducted with two co-authors, published in Science this month. Fisman and Markovtis describe the study as follows:

We measured attitudes toward equality by asking hundreds of Americans to distribute a pot of money between themselves and an anonymous other person. Our subjects weren't making hypothetical choices in responding to the survey-their decisions affected how much real money they would get when the experiment ended.

Each subject could keep or redistribute as much of her budget as she liked, but with a twist. Whereas the standard version of this experiment-known to economists as a "dictator game"-asks subjects to split a fixed pie, we varied the "price" of redistribution. In some cases, giving was expensive: Every dollar of her own that a subject sacrificed bought her anonymous beneficiary as little as a dime. In other cases, giving was "cheap": Every dollar sacrificed contributed as much as $10 to her beneficiary. Most cases fell between these extremes.

They go on to explain that "elite" participants (Yale law students, and, to a lesser extent, Berkeley students) were much more likely to favor "efficient" distributions, increasing the overall size of the pie, as opposed to equal distributions, even though they overwhelmingly identified as liberal Democrats. These results "suggest that the policy response to rising economic inequality lags so far behind the preferences of ordinary Americans for the simple reason that the elites who make policy-regardless of political party-just don't care much about equality."

I think there are two obvious weaknesses in the study. The first is that most Yale law students undoubtedly had familiarity with these games and may have believed that they are "supposed" to prefer the efficient result, i.e., that was the "correct" result. The second is that it's not at all clear to me that one can easily extrapolate from how one chooses to divide a pot in a game to how one behaves in politics. In particular, the fact that a Yale law student prefers greater overall wealth over equality when engaging in a game with other Yale law students hardly suggests that the student would prefer a candidate who opposes wealth redistribution, or that he opposes wealth redistribution via politics more generally. Private economic activity, including economically oriented experimental games, and politics are simply two different realms. I don't see any contradiction between someone like George Soros "playing to win" in the economic marketplace but then favoring redistribution through government.

Even more important, Fisman and Markovits' premise that Americans in general prefer a more egalitarian wealth distribution over greater wealth creation is false. We don't, in fact, need an explanation of how the wealthy elite are thwarting the egalitarian impulses of the public, because the public also favors "efficiency over equality."

The polling data on this is as clear as can be. Here's Gallup in June 2008, just before the greatest liberal political triumph in decades: "When given a choice about how government should address the numerous economic difficulties facing today's consumer, Americans overwhelmingly—by 84% to 13%—prefer that the government focus on improving overall economic conditions and the jobs situation in the United States as opposed to taking steps to distribute wealth more evenly among Americans."

Moreover, "Americans' lack of support for redistributing wealth to fix the economy spans political parties: Republicans (by 90% to 9%) prefer that the government focus on improving the economy, as do independents (by 85% to 13%) and Democrats (by 77% to 19%). This sentiment also extends across income groups: upper-income Americans prefer that the government focus on improving the economy and jobs by 88% to 10%, concurring with middle-income (83% to 16%) and lower-income (78% to 17%) Americans."

Even if you ask Americans about government-imposed redistribution in a way that seems skewed toward favoring such redistribution, e.g., should we "redistribute wealth by heavy taxes on the rich," with neither "heavy taxes" nor "the rich" defined, and no efficiency trade-offs suggested, only 52 percent of Americans agree. A recent working paper from the National Bureau of Economic Research concludes that "despite the large increases in economic inequality since 1970, American survey respondents exhibit no increase in support for redistribution." And while Americans typically answer "yes" to questions favoring greater taxation of people making over $1 million dollars or over $250,000, 78 percent of Americans say that the maximum percentage of a person's income that should go to all taxes is 30 percent or less, and 51 percent say less than 20 percent.

Markovits and Fisman conclude that Sanders' and Trumps' "disruptions of elite political control are no flash in the pan, or flings born of summer silliness. They are early skirmishes in a coming class war." Fortunately, they are almost certainly wrong.