Equalizing Income versus Equalizing Opportunity - A comparison of the United States and Germany
John Bishop and Buhong Zheng (eds.), Research in Economic Inequality 16 (pages 129-156). Emerald Group Publishing Limited
Germany has lower posttax income inequality than the United States and hence is doing better according to a strict egalitarian fairness ideal. On the other hand, the United States is doing better than Germany according to a libertarian fairness ideal, which states that people should be held fully responsible for their income. However, most people hold intermediate (responsibility-sensitive) positions, and this paper studies fairness of the income distributions in Germany and the United States according to these positions.
We find that only if peoples’ preferences are characterized by substantial degree of individual responsibility, the United States is considered less unfair than Germany. If we hold people responsible for the unexplained variation, the United States is considered fairer than Germany for all levels of responsibility sensitiveness. If we, on the other hand, demand compensation for the unexplained variation, Germany is fairer than the United States for all levels of responsibility. The latter may be seen as the preferred approach as it follows a “benefit of the doubt” strategy. To the best of our knowledge, this paper presents the first cross-country fairness comparison based on responsibility-sensitive ideals.