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Prof. Alexander Cappelen

NHH (Norwegian School of Economics), Bergen, Norway

Authors: Alexander Wright Cappelen, Cornelius Cappelen and Bertil Tungodden

Abstract: Major tensions in the welfare debate concern how to handle situations in which we are unable to distinguish between those who are deserving and those who are undeserving. We report from the first economic experiment to study how people make the trade-off between giving money to some who are undeserving, false positives, and not giving money to some who are deserving, false negatives.  We study the behavior of a representative sample of 2000 participants from the US and Norway, who were asked to distribute a sum of money between a group of workers, some of whom have worked and deserved to receive payment, and some of whom have wrongly report to have worked and did not deserve any payment. The study provides two findings. First, a large majority are more concerned with avoiding false positives than with avoiding false negatives. Second, the weight attach to false negatives is related to political preferences, with right-wing voters being more concerned with false negatives than left-wing voters. Our results suggest that political disagreements is not only about what should be viewed as fair, but also about how to handle the trade-off between false positives and false negatives.

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