ยป How Rich Should the Rich Be?
Rawls’ political philosophy principle, the Veil of Ignorance says that if you’re designing a society, you should do from the perspective that you will be randomly assigned a position in that society. For example: while Creative Anachronists all wish they were medieval nobles, in the real middle ages most people gathered muck for a living. It only makes sense to say “I wish I lived in the middle ages” if you were willing to bet at stiff odds that you’d be a noble instead of a peasant.
Krista pointed me to this study where some behavioural economists asked Americans to choose an income distribution from behind a Veil of Ignorance. I believe their quintile graphs are misleading, which invalidates the ideal they surveyed, so instead let’s consider if the population of the country were five people and their total wealth* was $100:
| American ideal | US actual | Canada | Sweden | Communism | |
|---|---|---|---|---|---|
| Alice | $31 | $84 | $69 | $36 | $20 |
| Bob | $23 | $11 | $20 | $20 | $20 |
| Carol | $22 | $4 | $8 | $18 | $20 |
| Dave | $13 | $0.2 | $2 | $15 | $20 |
| Eve | $11 | $0.1 | $0.1 | $11 | $20 |
As behavioural economists, their interest is showing that Americans irrationally support government policies that maintain an income distribution they don’t prefer. However, from a rational perspective, all these distributions are equivalent! The expected payout from each bet is $20: in other words, Alice’s life is better than Bobs to the proportional chance of being Alice instead of Bob.
But in the real world people are not behind a Veil of Ignorance but rather they have incomplete information. The authors speculate that there are a number of reasons why Americans don’t support income redistribution:
- they don’t know how relatively poor they are
- they overestimate their chance of getting richer
- they disapprove of or can’t agree on mechanisms to redistribute wealth (eg: taxes)
- their political positions don’t reflect rational self-interest
* We’re talking wealth rather than income, so the reason Eve is so poor is that she has a lot of debt.


