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Income Inequality, Reciprocity and Public Good Provision: An Experimental Analysis

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  • Andre Hofmeyr
  • Justine Burns

    ()
    (School of Economics, University of Cape Town)

  • Martine Visser

    ()
    (School of Economics, University of Cape Town)

Abstract

This paper analyses the impact of income inequality on public good provision in an experimental setting. A sample of secondary school students were recruited to participate in a simple linear public goods game where income heterogeneity was introduced by providing participants with unequal token endowments. The results show that endowment heterogeneity does not have any significant impact on contributions to the public good, and that consistent with models of reciprocity, low and high endowment players contribute the same fraction of their endowment to the public pool. Moreover, individuals appear to adjust their contributions in order to maintain a fair share rule.

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Bibliographic Info

Paper provided by Southern Africa Labour and Development Research Unit, University of Cape Town in its series SALDRU Working Papers with number 23.

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Length: 17 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:ldr:wpaper:23

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References

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  1. Alesina, Alberto & Rodrik, Dani, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 465-90, May.
  2. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  3. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  4. Isaac, R Mark & Walker, James M, 1988. "Group Size Effects in Public Goods Provision: The Voluntary Contributions Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 179-99, February.
  5. Andereoni, J., 1988. "Why Free Ride? Strategies And Learning In Public Goods Experiments," Working papers 375, Wisconsin Madison - Social Systems.
  6. Baland, Jean-Marie & Platteau, Jean-Philippe, 1997. "Coordination problems in local-level resource management," Journal of Development Economics, Elsevier, vol. 53(1), pages 197-210, June.
  7. R. Isaac & James Walker & Susan Thomas, 1984. "Divergent evidence on free riding: An experimental examination of possible explanations," Public Choice, Springer, vol. 43(2), pages 113-149, January.
  8. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
  9. Kenneth S. Chan & Stuart Mestelman & Rob Moir & R. Andrew Muller, 1998. "Heterogeneity and the Voluntary Provision of Public Goods," Department of Economics Working Papers 1998-04, McMaster University.
  10. Bohm, Peter, 1972. "Estimating demand for public goods: An experiment," European Economic Review, Elsevier, vol. 3(2), pages 111-130.
  11. Cherry, Todd L. & Kroll, Stephan & Shogren, Jason F., 2005. "The impact of endowment heterogeneity and origin on public good contributions: evidence from the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 357-365, July.
  12. Becker, Gary S, 1976. "Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology," Journal of Economic Literature, American Economic Association, vol. 14(3), pages 817-26, September.
  13. Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 137-158, Summer.
  14. Kenneth S. Chan & Stuart Mestelman & Rob Moir & R. Andrew Muller Moir, 1996. "The Voluntary Provision of Public Goods under Varying Income Distributions," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 54-69, February.
  15. Jeffrey Milyo & Jennifer M. Mellor & Lisa Anderson, 2004. "Inequality, Group Cohesion, and Public Good Provision: An Experimental Analysis," Working Papers 0418, Department of Economics, University of Missouri, revised 27 Dec 2004.
  16. Cardenas, Juan-Camilo, 2003. "Real wealth and experimental cooperation: experiments in the field lab," Journal of Development Economics, Elsevier, vol. 70(2), pages 263-289, April.
  17. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
  18. Chan, Kenneth S. & Mestelman, Stuart & Muller, R. Andrew, 2008. "Voluntary Provision of Public Goods," Handbook of Experimental Economics Results, Elsevier.
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Citations

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Cited by:
  1. Maxwell Burton-Chellew & Robert May & Stuart West, 2013. "Combined inequality in wealth and risk leads to disaster in the climate change game," Climatic Change, Springer, vol. 120(4), pages 815-830, October.
  2. Hasson, Reviva & Löfgren, Åsa & Visser, Martine, 2009. "Climate Change in a Public Goods Game: Investment Decision in Mitigation versus Adaptation," Discussion Papers dp-09-23-efd, Resources For the Future.
  3. Annarita COLASANTE & Alberto RUSSO, 2014. "The Impact of Inequality on Cooperation: An Experimental Study," Working Papers 401, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  4. Simone Gobien & Björn Vollan, 2013. "Playing with the social network: Social cohesion in resettled and non-resettled communities in Cambodia," Working Papers 2013-16, Faculty of Economics and Statistics, University of Innsbruck.
  5. Brekke, Kjell Arne & Konow , James & Nyborg, Karine, 2012. "Cooperation Is Relative: Income and Framing Effects with Public Goods," Memorandum 16/2012, Oslo University, Department of Economics.
  6. Sebastian Prediger, 2011. "How does income inequality affect cooperation and punishment in public good settings?," MAGKS Papers on Economics 201138, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  7. Agathe Rouaix & Charles Figuières & Marc Willinger, 2013. "The trade-off between welfare and equality in a public good experiment," Working Papers 13-03, LAMETA, Universtiy of Montpellier, revised Feb 2013.
  8. Weng, Qian & Carlsson, Fredrik, 2013. "Cooperation in teams: the role of identity, punishment and endowment distribution," Working Papers in Economics 551, University of Gothenburg, Department of Economics.

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