New Working Paper: The merit primacy effect

8 May 2017 18:20

(updated: 8 May 2017 18:30)

New Working Paper: The merit primacy effect

A new working paper by The Choice Lab researchers Alexander W. Cappelen and Bertil Tungodden is now available.

The paper is joint work with Karl Ove Moene and Siv-Elisabeth Skjelbred, affiliated with ESOP - Centre of Equality, Social Organization and Performance at the University of Oslo. It is published as Discussion Paper 06/2017, in the Department of Economics/NHH Norwegian School of Economics paper series. Please find the full paper by clicking on the link below.

Full paper (PDF)

Abstract:
Do people give primacy to merit when luck partly determines earnings? This paper reports from a novel experiment where third-party spectators have to decide whether to redistribute from a high-earner to a low-earner in cases where earnings are determined by luck and merit. The experiment has four treatments that vary the relative importance of luck and merit, but where it is always possible to decompose the part of the earnings that originate from each of the two sources. We argue that any reasonable fairness view in such cases should satisfy two fairness conditions: Fairness Consistency and Fairness Symmetry. Our main finding is that the spectators assign strong primacy to merit in situations where inequalities are due to both luck and merit, and as a result violate both fairness conditions. The spectators allocate close to the same share to the high-earner when merit only accounts for ten percent of the earnings as when merit accounts for all of the earnings, and paradoxically spectators allocate even more to the high-earner when luck determines a small part of the earnings. We believe that the results shed new light on inequality acceptance in society, in particular by showing how just a little bit of merit can make people significantly more inequality accepting.

Abstract:

Do people give primacy to merit when luck partly determines earnings? This paper reports from a novel experiment where third-party spectators have to decide whether to redistribute from a high-earner to a low-earner in cases where earnings are determined by luck and merit. The experiment has four treatments that vary the relative importance of luck and merit, but where it is always possible to decompose the part of the earnings that originate from each of the two sources. We argue that any reasonable fairness view in such cases should satisfy two fairness conditions: Fairness Consistency and Fairness Symmetry. Our main finding is that the spectators assign strong primacy to merit in situations where inequalities are due to both luck and merit, and as a result violate both fairness conditions. The spectators allocate close to the same share to the high-earner when merit only accounts for ten percent of the earnings as when merit accounts for all of the earnings, and paradoxically spectators allocate even more to the high-earner when luck determines a small part of the earnings. We believe that the results shed new light on inequality acceptance in society, in particular by showing how just a little bit of merit can make people significantly more inequality accepting.