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Cross-Racial Envy and Underinvestment in South Africa

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Author Info
Daniel Haile ()
Abdolkarim Sadrieh ()
Harrie A. A Verbon ()

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Abstract

Trust games are employed to investigate the effect of heterogeneity in income and race on cooperation in South Africa. The amount of socio-economic information available to the subjects about their counterparts is varied. No significant behavioural differences are observed, when no such information is provided. However, when the information is available, it significantly affects individual trust behaviour. The low income subjects from both racial groups invest significantly less in partnerships with the high income subjects of the other racial group than in any other partnership. We attribute this behaviour to cross-racial envy, which on aggregate may lead to substantial underinvestment in the economy.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1657.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1657

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Related research
Keywords: trust game; ethnic diversity; income inequality; cooperation;

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Haddad, Lawrence James & Maluccio, John A., 2002. "Trust, membership in groups, and household welfare," FCND discussion papers 135, International Food Policy Research Institute (IFPRI). [Downloadable!]
    Other versions:
  3. MICHAEL R. CARTER & Marco Castillo, 2002. "The Economic Impacts of Altruism, Trust and Reciprocity: An Experimental Approach to Social Capital," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 448, Wisconsin-Madison Agricultural and Applied Economics Department. [Downloadable!]
  4. Chaim Fershtman & Uri Gneezy, 2001. "Discrimination In A Segmented Society: An Experimental Approach," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 351-377, February. [Downloadable!] (restricted)
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  5. Joseph Henrich & Robert Boyd & Samuel Bowles & Colin Camerer & Herbert Gintis & Richard McElreath & Ernst Fehr, 2001. "In Search of Homo Economicus: Experiments in 15 Small-Scale Societies," Artefactual Field Experiments 0059, The Field Experiments Website. [Downloadable!]
  6. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1203-50, November.
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  7. Maluccio, John A. & Haddad, Lawrence James & May, Julian, 1999. "Social capital and income generation in South Africa, 1993-98," FCND discussion papers 71, International Food Policy Research Institute (IFPRI). [Downloadable!]
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  10. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August. [Downloadable!] (restricted)
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  11. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank. [Downloadable!]
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  12. Paul Collier, 2001. "Implications of ethnic diversity," Economic Policy, CEPR, CES, MSH, vol. 16(32), pages 127-166, 04. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Greiner, Ben / Ockenfels, Axel / Werner, Peter, 2007. "The Dynamic Interplay of Inequality and Trust – An Experimental Study," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Michael Naef & Jürgen Schupp, 2009. "Measuring Trust: Experiments and Surveys in Contrast and Combination," SOEPpapers 167, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
  3. Abbink, Klaus & Jayne, Thomas S. & Moller, Lars C., 2008. "The relevance of a rules-based maize marketing policy : an experimental case study of Zambia," Policy Research Working Paper Series 4727, The World Bank. [Downloadable!]
  4. Catherine C. Eckel & Ragan Petrie, 2008. "Face Value," Experimental Economics Center Working Paper Series 2008-11, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  5. Armin Falk & Christian Zehnder, 2007. "Discrimination and In-Group Favoritism in a Citywide Trust Experiment," IZA Discussion Papers 2765, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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