Does inequality cause cheating?

Does income inequality promote cheating?

 From the linked article:

Lukas Neville, a doctoral student at Queen’s University in Ontario, suggests another reason [ for observed increases in cheating]: Income inequality. In the latest issue of Psychological Science, he says that states in the U.S. where there’s more evidence of academic dishonesty also show a large gap between the rich and the poor. These income gaps lead to less trust among people and, therefore, more cheating.

I come to a similar conclusion, but by way of different reasoning. The way I see it, higher rewards for greater effort promote effort when they apply all the way across the distribution, but "winner-take-all" models actually break the association of "effort=reward" for the majority, and instead promote cheating.

Take a look at the rational expectations for increased effort in the following models. (for the purpose of this argument, we have a perfect meritocracy of equal individuals, where effort translates directly into output). Looking at someone in the middle of the distribution, we can see the radically different reward structure for increased effort:

In the right-hand model, the expected return for hard work is much less for the middle of the distribution, and almost none at the low end of the distribution.

If we assume that cheating operates by a different logic - where the calculation is simply how likely you are to be caught, and the chance that you can capture all or part of the highest returns - the steeper the curve, the greater the relative reward for cheating.

Q.E.D. Extreme inequality leads to greater rewards for cheating relative to hard work.

Think of it this way - if we give a class a test in which all the students fail except for one, only the few students who have a reasonable shot at the top score have a positive incentive to study. The rest are probably better off thinking of ways to steal the answer key.

Isn't this a pretty reasonable conclusion to draw from the last 10 years? Really, what is amazing is that so many people continue to follow the road of hard work.

I'm reminded of a passage in one of my favorite books, Organize!, my life as a union man, by Wyndham Mortimer (one of the founders of the UAW):

About this time, Miss Wooley [editor of the company union paper] had written an editorial...called "The Cost of High Living" in which she said, "There are too many people trying to get rich by their wits, and not enough by hard work."

Mortimer wrote a letter to the paper:

When you speak of people trying to get rich by their wits instead of by hard work, I am sure such people realize the utter impossibility of ever getting rich by work. The simple fact is that hard work does not pay. There is no money in it. I know, because I have been working hard for the past twenty-four years, and I have yet to entertain any hopes whatever of getting rich by it.

 For his letter, he got an invitation to speak to the Production Manager at the company where he worked. Maybe another day I'll relate how that incident went!