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Social Identity and Preferences over Redistribution

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Author Info
Klor, Esteban F
Shayo, Moses

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Abstract

We design an experiment to study the effects of social identity on preferences over redistribution. The experiment highlights the trade-off between social identity concerns and maximization of monetary payoffs. Subjects belonging to two distinct natural groups are randomly assigned gross incomes and vote over alternative redistributive tax regimes, where the regime is chosen by majority rule. We find that a significant subset of the subjects systematically deviate from monetary payoff maximization towards the tax rate that benefits their group when the monetary cost of doing so is not significantly high. These deviations cannot be explained by efficiency concerns, inequality aversion, reciprocity, social learning or conformity. Finally, we show that behaviour in the lab helps explain the relationship between reported income and stated preferences over redistribution observed in surveys.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6406.

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Date of creation: Jul 2007
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Handle: RePEc:cpr:ceprdp:6406

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Related research
Keywords: Experimental Economics; Income Redistribution; Social Identity; Social Preferences;

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Find related papers by JEL classification:
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

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References listed on IDEAS
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    Other versions:
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Cited by:
(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. Lindqvist, Erik, 2008. "Identity and Redistribution," Working Paper Series 735, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
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