The Psychology of Wealth and the Social Contract

Credit: Flickr User Philip Taylor
Credit: Flickr User Philip Taylor

Social science is telling us that morality and generosity decline among the most well-off.   Ever since I heard about this study at UC Berkeley I’ve been curious to imagine how these findings might apply to political systems.  It seems that material wealth, or even the feeling of wealth, has a greater impact on one’s attitudes towards others than previously believed; possibly even a greater impact than previous political ideology, upbringing, or education!   Studies have shown for some time already that generosity is more marked among those who have fewer resources compared to those with more, but now it seems we’re starting to get results that reveal even more about the nature of these differences.  There are intriguing hints at the sources of these really surprising findings.

Nick Powdthavee, an author of a study of the effect of lottery winnings, found that greater wins tend to make people more right-wing and inegalitarian.  He declared:

“We are not sure exactly what goes on inside people’s brains but it seems that having money causes people to favour conservative right-wing ideas. Humans are creatures of flexible ethics.”

Also in this study, the authors speculate about the effect on democracy, arguing that self-interest trumps morality in decision making.

This last point is where I depart a bit in interpreting the meaning of these studies.  Moving to the right may mean supporting an effort to protect one’s own ‘hoard’, but it is only ‘self-interested’ on an individual level, not necessarily on a social level.  Democracy is to some degree about keeping these tendencies in check and allowing a public good to emerge from the apparent conflict of interest created between the rich and the poor.   The paradox, of course, is that the wealthy MUST be on board the project of contributing to the social good at the very point when they are the least motivated to do so (due to their wealth, apparently).   As the wealthy opt out of the social contract that makes things better for everyone, they undermine themselves by eroding the means by which the social fabric is maintained.

 The paradox, of course, is that the wealthy MUST be on board the project of contributing to the social good at the very point when they are the least motivated to do so…

I assume, of course, that the wealthy are still in some way part of that social fabric.  Wealth seems to offer a way out of social obligations and norms [for example, by letting people think they can drive faster with a more expensive car, even if they end up paying a ticket].   But why do people choose to opt out, even if it becomes more expensive, and actually less rational, for them to do so? Why send your kids to private school, pay your taxes to another country, or get your healthcare from a boutique provider, when comparable services can be obtained much more cheaply by paying your fair share to the common pool?  It’s not exactly self-interested in the rational, economic sense, to do this.

I’m wondering if the answer has to do with the psychological need to control the environment, something that money provides unequivocally in a capitalist society.  What one loses in material cost [private school is more expensive than public, paying a ticket is more expensive than driving according to the rules, for example] is made up for in control over the process. If it is about control rather than about wealth, it has implications not only for what the rich do individually, but how they act toward the political system as a group.  For if the tendency to protect one’s own extends to the effort to control the society as a whole, it means the wealthy will make social laws and rules for everyone else that reflect their particular interests.

Fostering empathy in the minds of the wealthy may not be the way to go, as this article in the Atlantic suggests.  A considerable amount of energy is spent in encouraging charity among the wealthy, which has had little impact on the mindset.  Indeed, what is interesting is that most Americans have experienced poverty in their lives, if only temporarily, at one time or another.  This means a significant number of wealthy individuals, and yes, even members of Congress or Parliament, have also experienced poverty.  If the above studies are correct, it seems unlikely that this experience can trump the psychological effects of wealth, and the tendency to be less egalitarian or generous, that goes with wealth. It doesn’t seem likely that human nature will change.

Credit: Flickr User Brent Granby
Credit: Flickr User Brent Granby

Bridging the psychology of the individual with the need for a public good means bolstering institutions that supercede and limit the tendencies of the wealthy to opt out and to control the process. Unfortunately, many democratic institutions have been put in place to do exactly the opposite: to control and limit the worst excesses of the general public [see the Canadian Senate].

Public education, public health care, parental leave, elder care, social services, and even sewers and parks have often been thought of as contingent on ‘affordability’ (Yes I’m looking at you, BC Liberals!)  In fact, by highlighting the idea of the public good, these institutions remind us of the vulnerability of the social contract to the psychology of wealth. Now that we know more about the effects of wealth on our thinking  (and by that I mean everybody’s thinking) social planners should be better equipped to make the case for the defence of that social contract.  That defence should strongly state the need for everyone, but especially the wealthy, to be included in the social project from which we all benefit.