Lisa R. Anderson () (Department of Economics, College of William and Mary) Jennifer M. Mellor () (Department of Economics, College of William and Mary) Jeffrey Milyo () (Department of Economics and Truman School of Public Affairs, University of Missouri)
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Recent studies report that economic inequality is associated with reduced government expenditures on social programs. Several prominent social scientists, including Putnam [2000], attribute this relationship to the detrimental Òpsychosocial effectsÓ of group heterogeneity on cooperation. We test the hypothesis that inequality within a group reduces individual contributions in a canonical public goods experiment. Unlike previous examinations of inequality and public good provision, our design introduces inequality by manipulating the levels and distributions of fixed payments given to subjects for participating in the experiment. When made salient through public information about each individualÕs standing within the group, inequality in the distribution of fixed payments reduces contributions to the public good for all group members.
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Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number
12.
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