Income inequality. How efforts to reduce it can undermine motivation – and the pursuit of excellence
| DOI | https://doi.org/10.1108/JEPP-07-2016-0028 |
| Pages | 2-10 |
| Published date | 10 April 2017 |
| Date | 10 April 2017 |
| Author | Robert Alan Baron |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Income inequality
How efforts to reduce it can undermine
motivation –and the pursuit of excellence
Robert Alan Baron
Department of Entrepreneurship, Oklahoma State University, Edmond,
Oklahoma, USA
Abstract
Purpose –The purpose of this paper is to explain why (based on an extensive body of research findings)
efforts to reduce income inequality may have negative effects on motivation and the desire to excel.
Design/methodology/approach –This paper presents the author’s personal perspective on income
inequality and efforts to reduce it. However, these views are grounded in extensive literature concerning the
nature of “fairness,”and the harmful effects of weakening the link between performance or effort on the one
hand, and rewards on the other. Breaking this connection may be especially harmful for entrepreneurs, who
have strong beliefs that the hard they work in building their new ventures, the more likely are these
companies to be successful.
Findings –The paper presents what, it is hoped, provides a broadened framework within which to examine
the causes and income inequality, definitions of “fairness,”and the potential effects of efforts to reduce
such inequality.
Practical implications –By weakening the relationship between performance and rewards, efforts to
reduce income inequality involving large tax increases may weaken the relationship between performance
(accomplishment) and rewards, thus reducing motivation to work hard and achieve excellence.
Social implications –Understanding the negative implications of government-funded programs designed
to reduce income inequality helps to clarify the potentially detrimental effects of such programs –effects that
are neither intended not expected by proponents of such efforts.
Originality/value –The effects of efforts to reduce income inequality have not previously been examined in
the context of their negative implications for human motivation to work hard and attain excellence in any
endeavor –implications suggested by a large body of relevant research.
Keywords Income inequality, Fairness, Human motivation
Paper type Viewpoint
1. Introduction
“Income inequality”is a phrase that has appeared with increasing frequency in ongoing
political campaigns. For instance, Hillary Clinton, Presidential nominee of the Democratic
Party for the 2016 election, has indicated strongly and repeatedly, that she views reducing
“income inequality”as a major goal. Expanding on this theme, Bernie Sanders,
a self-described “democratic socialist”is even more strongly in favor of such efforts and
has said, repeatedly, that he views reducing income inequality as the “great moral issue of
our time.”Explaining how he would accomplish this goal he states, “If you have seen a
massive transfer of wealth from the middle class to the top one-tenth of 1 percent, you know
what, we’ve got to transfer that back […]”(emphasis added). Donald Trump, Republican
candidate for President suggests that the best way to close this gap is through economic
growth –encouraged by lower taxes on a large proportion of wage earners, existing
businesses, and especially entrepreneurs, whose earnings from their companies (if they are
sole proprietors) are currently taxed at the full individual tax rates, which now, with the
inclusion of Medicare tax, approach 50 percent.
Journal of Entrepreneurship and
Public Policy
Vol. 6 No. 1, 2017
pp. 2-10
© Emerald PublishingLimited
2045-2101
DOI 10.1108/JEPP-07-2016-0028
Received 22 July 2016
Accepted 22 July 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
The author is a Regents Professor and Spears Professor of Entrepreneurship at the Oklahoma State
University. However, the views expressed in this paper are solely those of the author and do not in any
way represent the views of the University, School of Entrepreneurship, Spears School of Business,
other departments or other faculty.
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JEPP
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