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A tale of two cities: an experiment on inequality and preferences

Author

Listed:
  • Maria Bigoni

    (University of Bologna & IZA)

  • Stefania Bortolotti

    (University of Bologna & IZA)

  • Veronica Rattini

    (University of Milan)

Abstract

The existence of a strong link between socio-economic background and individual preferences has been documented among both children and grown-ups. Here, we study whether such a correlation persists even in a highly homogeneous population of young adults: university students. Our findings indicate that participants living in an area characterized by a high socio-economic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, at least in part, driven by heterogeneities in beliefs: subjects from the most affluent part of the city have more optimistic expectations on their counterpart’s trustworthiness than those living in a lower socio-economic environment. By contrast, no significant differences emerge in other preferences: generosity, risk attitudes, and time preferences. Finally, we do not find any systematic evidence of out-group discrimination based on neighborhood identity.

Suggested Citation

  • Maria Bigoni & Stefania Bortolotti & Veronica Rattini, 2022. "A tale of two cities: an experiment on inequality and preferences," Theory and Decision, Springer, vol. 92(1), pages 189-222, February.
  • Handle: RePEc:kap:theord:v:92:y:2022:i:1:d:10.1007_s11238-021-09803-6
    DOI: 10.1007/s11238-021-09803-6
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    Cited by:

    1. Andrea F.M. Martinangeli & Peter Martinsson, 2019. "We, the Rich: Inequality, Identity and Cooperation in Complex Societies," Working Papers tax-mpg-rps-2019-19, Max Planck Institute for Tax Law and Public Finance.
    2. Martinangeli, Andrea F.M. & Martinsson, Peter, 2020. "We, the rich: Inequality, identity and cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 249-266.
    3. Zexuan Wang & Ismaël Rafaï & Marc Willinger, 2023. "Does age affect the relation between risk and time preferences? Evidence from a representative sample," Southern Economic Journal, John Wiley & Sons, vol. 90(2), pages 341-368, October.
    4. Blanco, M & Guerra, J. A., 2020. "To segregate, or to discriminate – that is the question: experiment on identity and social preferences," Documentos de Trabajo 18407, Universidad del Rosario.
    5. Arnstein Aassve & Pierluigi Conzo & Francesco Mattioli, 2021. "Was Banfield right? New insights from a nationwide laboratory experiment," Journal of Regional Science, Wiley Blackwell, vol. 61(5), pages 1029-1064, November.
    6. Martinangeli, Andrea F.M. & Windsteiger, Lisa, 2024. "Inequality shapes the propagation of unethical behaviours: Cheating responses to tax evasion along the income distribution," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 135-181.

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    More about this item

    Keywords

    Socio-economic status; Beliefs; Generosity; Risk attitudes; Time preferences; Trust; Trustworthiness;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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