Merit, Luck, and Taxes: Societal Reward Rules, Self-Interest, and Ideology in a Real-Effort Voting Experiment

• Author: Maximilian Lutz,Markus Tepe,Pieter Vanhuysse
• DOI: 10.1177/1065912920960232
• Published date: 01 December 2021
• Date: 01 December 2021
• Subject Matter: Articles

2021, Vol. 74(4) 1052 –1066

https://doi.org/10.1177/1065912920960232

Political Research Quarterly

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DOI: 10.1177/1065912920960232

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Motivation

The legitimacy, or lack thereof, of taxing high earnings is

a topic of perennial import to both students and practitio-

ners of politics. Citizens tend to evaluate high earnings

and earnings inequalities based on often implicit moral

rules of thumb about both work effort and the societal

practices and procedures that translate work effort, via

payrates and tax regimes, into earnings outcomes

(Bokemper, DeScioli, and Kline 2019; Lind 2006).

“Equal pay for equal work” is a popular moral criterion in

this regard—and a cornerstone of international human

rights law.1 It prohibits discriminatory wage policies, but

justifies wage inequalities based on performance differ-

ences. Whether this criterion is embodied in societal

practices is a question of significant salience in larger

debates about societal inequalities and meritocracy

(Almas et al. 2010; Almas, Cappelen, and Tungodden

2017; Autor 2014; Cappelen et al. 2013; Markovits 2019).

“Merit versus luck” is another key moral criterion for the

normative acceptance of wage inequalities. A long line of

“luck egalitarians” in political philosophy (e.g., Dworkin

2002; Rescher 1995) and political economists (e.g.,

Arrow, Bowles, and Durlauf 2000; Frank 2016; Roemer

1998) has addressed its equity implications. They argue

that the task is to distinguish to which degree outcome

inequalities derive from luck (e.g., birth, random encoun-

ters) or merit (e.g., risk taking, hard work), then to correct

the former through state intervention (as individuals are

not responsible) and accept the latter as just.

Survey evidence indicates that subjective beliefs

about responsibility, merit, and luck are important deter-

minants of popular support for state redistribution (e.g.,

Alesina and Glaeser 2006; Esarey, Salmon, and

Barrilleaux 2012b; Fong 2001; van Oorschot 2000,

2006). People who believe that income inequality or

poverty result from bad luck, rather than lack of effort,

are more willing to redistribute. This pattern is consis-

tent with cumulative experimental evidence from voting

on redistribution based on the Meltzer and Richard

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PRQXXX10.1177/1065912920960232Political Research QuarterlyTepe et al.

research-article2020

1University of Oldenburg, Germany

2University of Southern Denmark, Denmark

Corresponding Author:

Markus Tepe, Department of Social Sciences, University of

Oldenburg, Ammerländer Heerstraße 114-118, Oldenburg 26111,

Germany.

Email: markus.tepe@uni-oldenburg.de

Merit, Luck, and Taxes: Societal Reward

Rules, Self-Interest, and Ideology in a

Real-Effort Voting Experiment

Markus Tepe1, Pieter Vanhuysse2, and Maximilian Lutz1

Abstract

When are high earnings considered a legitimate target for redistribution, and when not? We design a real-effort

laboratory experiment in which we manipulate the assignment of payrates (societal “reward rules”) that translate

performance on a real-effort counting task into pre-tax earnings. We then ask subjects to vote on a flat tax rate

in groups of three. We distinguish three treatment conditions: the same payrate for all group members (“equal”

reward rule), differential (low, medium, and high) but random payrates (“luck” rule), and differential payrates

based on subjects’ performance on a quiz with voluntary preparation opportunity (“merit” rule). Self-interest is

the dominant tax voting motivation. Tax levels are lower under “merit” rule than under “luck” rule, and merit

reasoning overrides political ideology. But information is needed to activate merit reasoning. Both these latter

effects are present only when voters have “full merit knowledge” that signals precisely how others obtained their

incomes.

Keywords

redistributive voting, real-effort task, politics of luck, merit reasoning, fair compensation, laboratory experiment,

taxation, payrate

Article