Monthly Archives: October 2012

Income Redistribution vs. Grade Redistribution: An Economic Sophism

This argument tends to crop up every once in a while. Young America’s Foundation, which is responsible for the above video, describes it as follows (emphasis in original):

[W]hen students at Carthage where asked if they would be willing to sign a petition to redistribute GPA points from the top 10% to the rest of the college, most of them said NO. One student said, “No, because I worked hard for my grades!”

Another said, “At Carthage, each student has an equal opportunity to get the GPA they desire.” And another, “I don‘t want my GPA being taken away from me if I had an ’A’.”

When the petitioners told students that oftentimes outside factors leave students at an unfair disadvantage, a student said, “No. I’m low-income and a minority, and I have a fairly decent GPA, so…” 

Fittingly, some not in the upper 10% welcomed the free points. “Why not? I’m down,” said one student with a low GPA  (eagerly signing the petition), but then the student’s friend standing next to him said, “It takes away from people working hard… and obviously it’s paid off with their higher GPA.” Later in the conversation, when the first student told his friend to sign the petition, the friend responded, “How about trying harder for a semester?”

The main purpose of the study is to point out the ‘hypocrisy’ of being in favor of income redistribution while refusing to redistribute one’s own grades. The fact is, however, that this entire argument is based on fallacious reasoning, or more specifically, a false analogy.

Since some countries don’t use the GPA system, let’s stick with percentage points. Grades have a value between 0 and 100%. This means that ‘redistributing’ percentage points detracts from one’s final grade the exact amount of percentage points that were redistributed. This should be obvious. Let’s think of this in utilitarian terms, assuming each person assigns the same value to each percentage point. This means the top 10% lose utility in exactly the same proportion that the others gain that utility. But this goes against our natural sense of justice: why should one person be harmed so that other, undeserving, people gain? In economics we say this sort of situation is Pareto optimal: no-one can gain without someone else losing.

Now let’s imagine a slightly different, but still plausible scenario. Some schoolwork gives bonus points, where if you score over 100%, you can transfer the extra percentage points to another paper. It’s common for students to calculate exactly the grades they need on their remaining assignments or tests in order to get the grade they want. So imagine a student has amassed a very large number of bonus points—so many that even if they get a zero on all of their subsequent assignments and tests, they will still get a final grade of 100%.

It’s this latter case that corresponds to income in the real world, not the case presented in the video. No doubt, a multimillionaire could live comfortably without working, as long as they avoid extravagance. Even if a disaster happened, they could make up the loss without fearing for their financial security. In the same way, if a student has enough bonus points to guarantee a final grade of 100%, they will be indifferent about receiving any more bonus points; they lose nothing by redistributing their extra percentage points, so have no reason to object to redistribution. Again, in economic terms, the state of this economy prior to redistribution is not Pareto optimal. Since redistributing extra bonus points (above the 100% threshold) doesn’t harm the high-grade student, therefore other, low-grade students can be made better off without making the high-grade student worse off.

To drive home the point, the only way the analogy in the video would apply to real life would be if there were a maximum income, and after this, taxation was 100% (with, perhaps, infrequent ‘bonuses’). Obviously, this isn’t the case.

Thus, the only relevant questions left about our imaginary scenario are: 1) whether the bonus points are the top-grade student’s property, to be used any way they wish—e.g., in a scenario where bonus points can be spent on luxury goods; and 2) whether it is people’s own fault that they can’t become wealthy, or whether society is to blame—i.e. whose agency is behind a given person’s poverty. Yet, these are at root metaphysical questions, the kind that philosophers have thought about for millenia, and for which no solution is likely forthcoming. So it would seem that much of the public debate about welfare revolves around different attempts of patching up various gaping holes in philosophy. Moreover, the particular type of attempt a person gravitates to is typically chosen without any conscious contemplation, but often more or less out of habit, i.e. by what views they have previously been exposed to.

In short, then, appeals to metaphysical concepts won’t likely convince people whether welfare is justified. In other words, the vast majority of public discourse on the topic of welfare can safely be thrown in the garbage without a second thought. If we’d like to say anything meaningful at all about such issues, our best best would be to focus on empiricism, i.e. questions such as whether the value added by such measures (in terms of increased productivity, decreased need for health care, etc.) is enough to justify their cost.