It's well known among economists that most people don't like income disparities, especially when they're on the lower rungs of the economic ladder. This is reflected in polls and scientific studies, but also just everyday common sense. Yet many of our societies suffer from a widening gap between the haves and have-nots. If we hate economic inequality so much, why do humans keep supporting institutions that concentrate wealth in a tiny percentage of the population? A new cross-cultural study led by economists working in China suggests one possible reason: people are not willing to redistribute wealth if they think it will upset the social hierarchy.

Zhejiang University business school professor Zhou Xinyue and his colleagues conducted a simple experiment using a game that allows players to redistribute income between two people. They describe the results in Nature Human Behavior. Players were shown pictures of two people and told that one has randomly been given a large amount of money and the other a small amount. Then players were asked whether they would be willing to allow the money to be redistributed under two basic conditions: one, if the redistribution leaves the "rich" person still richer than the other; and two, if the redistribution reverses the roles and leaves the "rich" person poorer than the other.

Zhou and colleagues did tests on subjects in China and continued their tests with Indian and Caucasian subjects via Mechanical Turk. They found that responses were surprisingly uniform: 76.87% of people were willing to redistribute money if the rich person remained slightly wealthier than the poor person, thus keeping "social ranking" intact. But only 44.8% of people were willing to redistribute the money if it meant reversing the fortunes of the "rich" and "poor" people.

Zhou and his colleagues identify this odd quirk in people's responses as an artifact of "rank-reversal aversion," or a fear of upsetting hierarchy. When the researchers tested children, they found that rank-reversal aversion doesn't develop until children are 6-10 years old, which suggests that this aversion is learned culturally as the child grows up (the urge to redistribute wealth develops around the age of four).

In addition, the Tibetan herders who participated in the study had a markedly higher level of rank-reversal aversion than other subjects. This also suggests the trait is cultural: the Tibetan group came from a culturally distinct, traditional society with far less market integration than other groups, and therefore their answers were different.

Many humans appear to have two deep-seated beliefs that are in fundamental contradiction. We don't like wealth inequality, but we also don't like to overturn social rankings. Zhou and his colleagues say this could explain why it's so hard for people to solve problems with inequality.

Beyond greed

What's especially intriguing is that this study reveals that people didn't like to see other people's fortunes reversed. So this isn't about selfishness or protecting what's yours. It's some kind of fear of upsetting the hierarchy that goes beyond greed.

Economists Gary Charness and Marie Claire Villeval write in a related article for Nature that rank-reversal aversion might be related to "loss aversion," a syndrome where "a demotion in... rank triggers a more negative effect on motivation than a promotion boosts effort." They add:

Third parties may anticipate the powerful effect of demotion and potential negative social and economic spillover effects of rank reversal. Rank-reversal aversion may derive from a fear of violence and anti-social behavior from originally wealthier people who would suffer from both reduced payoffs and loss of status.

Seeing someone lose rank is so disturbing that it outweighs other considerations. We'd rather keep the existing hierarchy, even if it means nobody gains anything. This could also help explain why poor people often vote for programs that benefit the wealthy.

Zhou and his colleagues suggest our aversion may be ethical, too. "One reason why participants may feel that rank ordering should be preserved is a belief in a just world," they write. Even though participants know the money was assigned randomly, they "may assume that those earning a higher income are more deserving."

Either way, we're stuck with a bunch of people whose cultural norms have taught them to fear redistributing wealth if it might upset the social order. We want income equality, but we don't want to rock the boat. Is there any way to get out of this conundrum?

Eliminating rank isn’t a problem

One hopeful outcome of Zhou and his team's experiments is that the majority of subjects were not averse to eliminating rank. When given the opportunity to redistribute money so the "rich" person had the same amount as the "poor" person, roughly 76% of people chose to do it. This is essentially the same number who were willing to redistribute money as long as rank was preserved. Zhou and his colleagues conclude, "We find that participants are averse to rank reversals but are not averse to the elimination of rank."

This is a tantalizing discovery for people who would like to eliminate income inequality. It suggests that people might be more open to reducing income inequality if there were a guarantee that nobody's fortunes would reverse. "Our equality condition shows that people would accept the elimination of hierarchies," write Zhou and his colleagues. "It is only when winners become losers and losers become winners that people object."

Nature Human Behavior, 2017. DOI: 10.1038/s41562-017-0142 (About DOIs).