Public goods and services are vital to the smooth running of society, but a new study from Harvard University suggests that too much inequality can dampen public support for them, with damaging consequences for the whole of society.
The researchers suggest a sweet spot that is neither too egalitarian or unequal is the ideal mixture for public support of things like parks and street lighting, as a degree of inequality is required to help ensure that everyone contributes to such public goods.
The team wanted to explore how people with different incomes and productivities would cooperate together through the lens of financial contributions to the public good. They developed a mathematical model to test their hypothesis, and found that in an extremely unequal society, richer people were less likely to contribute a proportional share towards such goods, which in turn resulted in those with lower incomes withholding their own contributions.
“To ensure our public goods are maintained, we need to understand what impact inequality plays,” the researchers explain. “Many people view inequality as either categorically bad or good, but our research demonstrates that it is more complicated than that. We looked at it in a slightly different way—under what conditions does inequality become harmful and are there cases where it can also be beneficial? The main takeaway from our research is that if inequality runs away with us, we are threatening the maintenance of public services. Eventually, too much inequality negatively affects everyone’s outcomes—both for the poorest but even the rich.”
Fair contributions
The matter was complicated somewhat when different productivities were taken into account, as in such scenarios a degree of income inequality actually encouraged both ends of the income scale to contribute. The authors suggest that when a degree of inequality exists, and specifically when both groups are still able to exert enough influence to hold the other to account for their contributions, then those with higher productivity were more likely to contribute.
“But there is a limit: Once the inequality between the two people becomes too large, the influence over the other person is lost and the poorer player is at the mercy of the more powerful rich player. Neither of them has much incentive to cooperate anymore and cooperation breaks down quickly,” the researchers continue.
The team hope that additional research will be conducted in this area in future to allow policy makers to better understand the kind of forces that may affect our willingness to contribute to the public goods that make up such a large proportion of government services.
