Thursday, November 17, 2011

Money and stuff create different beliefs about fairness

Fairness matters a lot to us.  From a young age, children complain about inequalities with the chant, “That’s not fair.”  Debates about public services by the government focus on whether particular programs are treating taxpayers and citizens fairly.  People’s happiness at their jobs is influenced by whether they feel like they are being treated fairly at work.  The Occupy Wall Street movement is based on the perception that wealth is not distributed fairly in the United States.

Part of what complicates the ability to treat others fairly is that what people may consider to be fair may change with circumstance.

For example, people generally have (at least) two different beliefs about fairness.  One prominent belief about fairness is equity.  That is, we often like to distribute things to people evenly, so that everyone gets the same amount. 

However, a second strong belief is fair reward.  That is, we believe that people should be compensated for an outcome based on how much they contributed to that outcome.  That is why we allow people to be paid different amounts at a job.  We think it is fair that people who are more successful on the job are paid more money, even though that means that there are inequalities in how much people are being paid. 

A study by Sanford DeVoe and Sheena Iyengar in the February, 2010 issue of Psychological Science examined these beliefs in fairness.  They found that the standard people used to judge fairness was based on the object used to reward people.

They had participants in a study evaluate the fairness of a reward.  They were told that a company was planning to reward its sales staff after a very good year.  Some people were told that the reward was money (the sales staff was going to get a bonus).  Some were told that the staff was going to get rewarded with credit card reward points that could be exchanged for goods.  A third group was told that the sales staff was going to get vacation days as a reward.  A fourth group was told that the staff was going to get boxes of chocolate.

Participants were then told that the reward was going to be divided equally among the sales people.  That is, the sales staff would each get the same reward, even though not every sales person sold the same amount that year.  Participants rated the fairness of this reward scheme.

There was a strong effect of the type of reward on the beliefs about fairness.  People thought that rewarding people equally was fairer when the reward was chocolate or vacation days than if it was money or credit card points. 

This result suggests that we associate different types of items with different concepts of fairness. 

We tend to distribute things equally to people.  For example, when we are giving candy to a group of children, we tend to distribute it equally to all of the children.  So, when people see things distributed to groups, they tend to use this kind of scheme to evaluate fairness.

On the other hand, we tend to distribute money unequally.  People make more money when they are more successful.  So, we tend to judge the fairness of transactions with money (and with things that are like money such as credit card points) based on a scheme in which reward is related to success.

These findings make clear that if we want to predict whether people will think we are judging them fairly, we have to take into account both the beliefs people have about what is fair as well as the relationship between those beliefs and the specific objects that are involved in the situation.