In new research, Marcel Preuss, Germán Reyes, Jason Somerville, and Joy Wu find that MBA students’ attitudes toward inequality and fairness vary from those of the average American. As these students will one day form the business and political elite of the United States, the findings have implications for the future of inequality in the U.S.
Consider the recent tax bill passed by the United States Congress. By some estimates, Americans earning less than $51,000 will experience a decrease in their after-tax income, whereas the top 0.1 percent will receive an average gain of $389,000. This tax bill exemplifies policies that have contributed to income inequality in the U.S., which is now among the highest in the developed world. What makes the U.S.’ high level of income inequality particularly puzzling is that most Americans want a more equal distribution of wealth. So why do policies that deepen inequality keep emerging?
Although many factors explain this puzzle, one underappreciated explanation is that those who design, influence, and pass policies—legislators, advisors, lobbyists, and CEOs—may hold fundamentally different views about inequality compared to average citizens. After all, policies don’t emerge in a vacuum. They reflect the values and priorities of those who shape them, many of whom are part of an economic elite.
This raises an important question: Do elites think differently about inequality than the citizens they represent or whose lives they influence through business strategy and policy design? Answering this question is challenging because it is notoriously difficult to engage current political and business leaders in research.
In a new study, we find a way to shed some light on this question. We studied a sample of tomorrow’sbusiness elite—MBA students at an American Ivy League university—to understand how they think about fairness, inequality, and some of the tradeoffs inherent in redistribution.
Inside the business school mind
To understand how future elites think about fairness, we used an experimental approach that economists call the impartial spectator design. Our study proceeded in two distinct stages. We first hired over 800 workers to complete an online task, then randomly paired them to create two different scenarios of unequal earnings. In the first scenario, based on merit, the worker who performed better earned $6 while their partner earned nothing. In the second scenario, based on luck, we randomly assigned the same $6-to-$0 split regardless of performance.
Here’s where the MBA students entered. Acting as “impartial spectators,” they decided if and how much to redistribute earnings between these paired workers. Since MBA students were allocating money between other people rather than to themselves, their choices reflected pure considerations of fairness uncontaminated by self-interest. The MBA students knew only that the two workers had competed a real-effort task and which worker was initially allocated the $6, but had no information about the workers’ identities or demographic characteristics. Importantly, their choices had real consequences: workers received actual payments based on the MBA students’ choices.
Our first finding is that MBA students consistently maintain higher levels of inequality than the average American. When initial earnings reflected pure luck, MBA students redistributed only 32.3% of earnings from the high-earnings worker to the low-earnings worker, compared to 41.8% among representative Americans in a comparable study. This gap persists even when inequality stems from effort rather than chance. In other words, whether the source of inequality was merit-based or purely random, MBA students chose to preserve more unequal final earnings distributions, transferring less from high earners to low earners than what typical Americans consider fair.
These differences were substantial. To put this in perspective, the gap in implemented inequality between MBA students and average Americans in analogous experiments represents about one-third of the difference in implemented inequality between individuals in the U.S. and individuals of the more egalitarian Scandinavian countries when the latter make redistribution choices in similar experiments.
When redistribution comes at a cost
The most striking difference in attitudes toward inequality and fairness between MBA students and average Americans emerged when we introduced an efficiency cost to redistribution. In some scenarios, redistributing money destroyed part of it—for every dollar taken from the high-earnings worker, the low-earnings worker received only fifty cents. This mirrors real-world tax and transfer systems, where administrative costs and distorted incentives mean that redistribution shrinks the total pie.
Previous research shows that the average American does not adjust their redistribution when faced with such costs. They continue redistributing at nearly the same rate, prioritizing fairness over economic efficiency. MBA students responded very differently. When redistribution became costly, they reduced their redistribution by approximately 45 percent, revealing that efficiency considerations play a central role in shaping their distributive preferences.
This finding suggests a fundamental difference in how future business leaders approach economic tradeoffs. While typical citizens focus primarily on achieving fair outcomes, MBA students carefully weigh fairness against efficiency, often choosing to preserve a larger economic pie even if it means accepting greater inequality. This sheds light on why efficiency concerns are often touted as primary motivations for cutting government spending in political discourse.
Nuanced fairness views
Beyond their overall tolerance for inequality and sensitivity to efficiency, MBA students also revealed a more complex understanding of fairness itself.
This complexity becomes clear when we examine how individuals can be classified according to their fairness ideals. A seminal study using the impartial spectator design found that about 15 percent of Americans are “egalitarians” (they always equalize earnings), about 30 percent are “libertarians” (they never redistribute earnings), and about 40 percent are “meritocrats” (they redistribute more earnings when inequality is due to merit than when it is due to pure chance).
What about MBA students? They were actually less likely to fit the strict meritocrat profile: only 23 percent fell into this category. Instead, many of them exhibited what we call “moderate” views. These individuals recognized the role of luck in outcomes, redistributing more when inequality resulted from luck rather than performance. Nevertheless, they still permitted lucky recipients substantial earnings advantages and awarded them more than the average American would.
Beyond MBA students
A natural concern is whether these findings reflect something unique about MBA students rather than a broader pattern among economic and political elites. Several pieces of evidence suggest our results extend beyond this specific population.
First, we replicated our study with undergraduate business students at the same Ivy League university. Despite being younger and at an earlier stage in life, these students exhibited nearly identical patterns: greater tolerance for inequality and heightened sensitivity to efficiency costs.
Second, our findings align with evidence from studies of other elite populations. Research using Yale Law School students found that they were substantially more focused on efficiency than average Americans when choosing how to allocate resources between themselves and others. Similarly, a study on the richest five percent of Americans shows that they are more tolerant of inequality than the bottom 95 percent of Americans.
Together, this evidence points to a systematic difference in how those on track for economic and political leadership think about fundamental questions of inequality.
The preferences gap that shapes policy
Taken together, our findings show that the MBA students in our study—tomorrow’s CEOs, policy advisors, and policymakers—have different views on fairness and care more about efficiency than the average American. It is likely that when they eventually design compensation systems, influence tax policy, or advise on economic reforms, they’ll bring these values with them. This gap in preferences may help explain certain characteristics of American economic policies. Consider executive compensation: boards populated with business school graduates often approve pay packages that would shock most Americans, viewing hundred-million-dollar bonuses not as inequality-inducing but as an improvement to efficiency. Or think about the persistent resistance to wealth taxes—policies that poll well among citizens but face fierce opposition from economic elites who often frame them as threats to growth rather than tools for creating a less unequal society. The average American may raise an eyebrow at tax cuts for the richest Americans, but our research finds that elites simply have different attitudes towards inequality and redistribution.
Authors’ Disclosures: The authors report no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
Subscribe here for ProMarket’s weekly newsletter, Special Interest, to stay up to date on ProMarket’s coverage of the political economy and other content from the Stigler Center.
