What Your Cable Service Tells Us About the Buffett Rule
January 31, 2012 1 Comment
There’s a bundle of research demonstrating the human preference for fairness (even 4th graders are on board), but many of these experiments seem too far removed from real world situations where real money is on the table. The question remains: What are people willing to give up in the name of fairness?
A new study by Yu Wang and Aradhna Krishna avoids the shortcomings of previous research by having the monetary consequences of a subject’s decisions affect the payout they receive for participating in the experiment. The researchers presented subjects with the hypothetical opportunity to save money on their cable bill by switching companies. The catch was that the savings arose because the new company gave them a discount for being a new customer. Meanwhile, the company’s old customers had to pay a higher price, something that could be deemed unfair. Interestingly, even though making the switch could earn participants a few more real-world dollars, Wang and Krishna found that almost a quarter of subjects avoided switching because they deemed the deal they were being offered was unfair to the company’s current customers.
The fact that subjects were willing to forgo a real monetary gain to protest hypothetical unfairness shows a chunk of people actually do care enough about the treatment of others to impose a type of Buffett Rule on themselves. It also suggests that support for the OWS movement is not merely driven by people upset that they’ve ended up at the bottom of the income distribution. Finally, if fairness can affect real life monetary decisions, it means manipulating perceptions of fairness has the potential to be a useful policy tool (e.g. “it’s unfair to others that your lack of medical insurance means they must cover your emergency care.”)
Wang, Y., & Krishna, A. (2012). Enticing for me but unfair to her: Can targeted pricing evoke socially conscious behavior? Journal of Consumer Psychology DOI: 10.1016/j.jcps.2011.11.004