The topic of inequality in terms of wealth or income has become central to the political debates in western market democracies, and especially so in the US. CEOs, star athletes and celebrities are rewarded mindbongling sums of money many times those of an average worker, athlete or celebrity. We often talk of an “winner take all” culture. At least in the case of wealth disparities, we know that they can be the product of long periods of favorable tax treatment of certain sources of income.
But what about income disparities? There is no short supply of explanations and justifications for the lopsided income distribution we observe in various industries. Hiring agents and compensation consultants as well as academic economists have plenty of answers. Income disparities though are more difficult to explain if one starts reading what animal ethologists (those who study the behavior of animals) and evolutionary psychologists have discovered through observation and numerous experiments.
Let’s start with animals, and specifically with monkeys and the great apes (chimpanzees, bonobos and orangutans). Capuchin monkeys keep an eye on rewards received by other monkeys and seem to compare them to theirs. They don’t seem to mind if rewards are given without asking for some effort. Once though work or effort is required, those receiving relatively less go literally on strike! They refuse to execute tasks as a condition of getting the reward. The same reaction, of refusing relatively less reward from another child that controls the split has been reported for children ages three to five. Feeling slighted when one receives less than others for similar effort is manifestation of “first-order” fairness.
But we also have evidence of “second-order” fairness as in the case of a dominant female or male ape intervening to redistribute something of value between quarreling apes because of unequal sharing. Or when bonobos are observed to leave food on the “table” when they are watched by fellow bonobos who receive no food. Chimps also accept that prey food should go first to the catchers than the most powerful chimps, thus prioritizing incentives over hierarchy. Frans De Waal,* who has studied great apes extensively, proposes that first- and second-order fairness originate with the emotion of envy which then turns into the positive behavior of fair sharing in order to maintain cohesion of the group. He finds fair rules of sharing are enforced more among chimps and capuchins because these species need collaboration to be successful in hunting.
Michael Tomasello,** who focuses on the social and moral development of young children in comparison to apes, also shows how the natural maturation of children endows them from infancy with the inclination for prosocial behavior grounded on fairness and sharing with others. After the age of two, children start to develop a perspective of others whom they now consider as equivalent to them and, hence, deserving fair sharing of resources (toys, candy). Gradually, sharing becomes more reciprocal and is limited to the group of partners. Interestingly, young children start to avoid sharing with free riders. By school age, children have expanded their sense of fairness beyond those who collaborate with them. Thus, fairness is now felt and practiced as a social norm. Very importantly, in addition to how rewards are split, young children become sensitive to the rules of resource distribution.
The analyses of De Waal and Tomasello reveal several important findings. First, collaboration and in-group cohesion are important drivers in the emergence of fair behavior. When collaboration and social cohesion are important for survival the trait of fairness is naturally selected. Second, what matters is not so much the nominal amount of reward as is the relative amount – what I get relative to others. Third, the sentiment of fairness relates reward to the effort required. Young children understand that greater effort deserves greater reward.
These findings show that the construct of Homo Economicus, that is, the rational decision maker, driven by selfish interest, and seeking to maximize resources (income and wealth), is not the human type nature has selected for survival. Apes sacrificing some of their food and children entirely refusing any reward because of an unfair distribution do not describe the Homo Economicus. Additional proof of that can be also found in the literature of behavioral economics. In his book Thinking, Fast and Slow, Daniel Kahneman shows how cognitive and emotional biases lead humans to decisions that violate the conditions of rationality and the goal of wealth (or income) maximization.
How can we then explain the enormous disparity in income distribution? I suspect that although we all start with the same nature-given attribute of fair sharing, cross-cultural differences shape our behavior with respect to sharing as we grow older. For example, in 2014, CEOs in the US earned 354 times the salary of the average worker. In contrast, in Europe, the ratio varied from a high of 148 in Switzerland to a low of 28 in Poland. So, what explains this?
My own most likely candidate is the cultural fascination of Americans with individualism and the value of persons in chief positions. What this culture ignores is the value of collaboration and the value of social cohesion. It stretches credulity to believe that the fortunes of a corporation rest only on the abilities and decisions of its CEO and not the collective effort of all employees. It is also dangerous to disregard the resentment of average people as they observe few to capture the lion’s share while themselves pick up the crams.
People do not begrudge rewards earned by superior work efficiency, talent, and industriousness. But are we certain that the astronomical incomes of some earners are truly due to these attributes? Isn’t there a possibility that an uncritical and uninformed analysis of relative effort and value of work has hypnotized people into believing that there is a sound basis for the income disparities? Are we sure we have not degraded the value of collaboration and social cohesion in American society? How do we square the idealism of the American dream based on work with the observed reality of fellow citizens barely making a living at the minimum wage?
Adam Smith hit the mark when in his The Theory of Moral Sentiments wrote:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.
* Frans De Waal, Mama’s Last Hug, (2019). This is a wonderful book on animal emotions and what they tell us about ourselves.
** Michael Tomasello, Becoming Human: A Theory of Ontogeny, (2019).
Let's Reason 
“My own most likely candidate is the cultural fascination of Americans with individualism and the value of persons in chief positions” (this is Trump’s image that got him elected) and “It is also dangerous to disregard the resentment of average people as they observe few to capture the lion’s share while themselves pick up the crams.” (These are the people that elected him against their own interest). Why do people vote against their best interest?
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