Taxation Game

From time to time, I will play a game or create an exercise to get my students thinking about a subject in an experiential way. I find it prompts discussion and opens the door to understanding a topic on an intuitive level. I'm also interested to see economic or political principles demonstrated within a group that may be as small as 20 students.

The game that I played with two groups of students this week was an attempt to work with these principles in a very simple way. I thought of it as I was running, and pondering a panel discussion that I had attended for the 30th anniversary of the Journal of Democracy.  At that event, there were all sorts of theories & conjectures posited about democracy around the world - but very little discussion of the role that income & wealth inequality play in establishing & maintaining democracy. To my way of thinking, on factor in the international crisis in democratic institutions that we see occurring around the world is the yawning gap between the poor & the wealthy. The problem is touched on here by Ariel Dorfman, the wonderful Chilean journalist.

Here's the game.

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First Game

1.     Every student gets 10 – 12 dollars.

2.     The task is presented:

a.     The bridge connecting the town needs to be rebuilt. The cost will be 30 dollars. If the bridge is rebuilt, the economic impact of the project will result in an additional 50 dollars for the whole community.

b.     The players must vote how to fund the project.

                                               i.     Choices:

1.     Each player contributes an equal share to the fund the project

2.     Each player contributes a proportional share of wealth to fund project

                                             ii.     Players can opt not to participate, but if they don’t, they cannot reap benefit

c.     If a group of students can decide agree to fund the project without the participation, they can.

d.     Suppressing the vote is possible with private militia forces.

e.     Private militia forces cost $20.

Second Game

1.     All but two students get three dollars.

2.     Two students get $84.

3.     Task is presented.

a.     The bridge connecting the town needs to be rebuilt. The cost will be 30 dollars. If the bridge is rebuilt, the economic impact of the project will result in an additional 50 dollars for the whole community.

b.     The players must vote how to fund the project.

                                                        i.     Choices:

1.     Each player contributes an equal share to the fund the project

2.     Each player contributes a proportional share of wealth to fund project

                                                      ii.     Players can opt not to participate, but if they don’t, they cannot reap benefit

c.     If a group of students can decide agree to fund the project without the participation, they can.

d.     Suppressing the vote is possible with private militia forces.

e.     Private militia forces cost $20.

Questions to be asked.

1.     What – roughly - were the results in the two different games?

2.     How do you explain the results?

3.     What truths about politics do you think the results reflect?

4.     As a policy advisor, can you make any recommendations to make this process work better?

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After the students have submitted their reflections on the assignment, I will give them this article by Carles Boix to read. They haven't been introduced to the Exit, Voice, Loyalty Model yet, but I think many of them will be capable of the intuitive understanding of the principle behind the game.