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Inequality, Group Cohesion, and Public Good Provision: An Experimental Analysis

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  • Lisa R. Anderson
  • Jennifer M. Mellor
  • Jeffrey Milyo

Abstract

Recent studies argue that inequality exerts a negative influence on numerous social indicators. One explanation for this is that inequality reduces group cohesiveness (a component of social capital) and dampens popular support for expenditures on public goods and social programs. In light of competing theoretical explanations and mixed empirical evidence of the effect of inequality on government provision of public goods, we conduct a novel test using a public goods experiment. Our experimental 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 individual’s standing within the group, inequality in the distribution of fixed payments reduces contributions to the public good for all group members. Once we control for the unequal distribution of payments, an individual’s own relative standing within the group has no independent effect on contributions.

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  • Lisa R. Anderson & Jennifer M. Mellor & Jeffrey Milyo, 2003. "Inequality, Group Cohesion, and Public Good Provision: An Experimental Analysis," Working Papers 0308, Harris School of Public Policy Studies, University of Chicago.
    • Handle: RePEc:har:wpaper:0308
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    Cited by:

    1. Burns, Justine & Keswell, Malcolm, 2015. "Diversity and the provision of public goods: Experimental evidence from South Africa," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 110-122.
    2. Jennifer M. Mellor & Jeffrey Milyo, 2003. "State Social Capital and Individual Health Status," Working Papers 0310, Harris School of Public Policy Studies, University of Chicago.
    3. Marianna Baggio & Luigi Mittone, 2016. "Experience and History: An Experimental Approach to Generational Heterogeneity," International Journal of Applied Behavioral Economics (IJABE), IGI Global, vol. 5(4), pages 1-23, October.
    4. Jeffrey Milyo & Jennifer M. Mellor & Lisa Anderson, 2004. "Do Liberals Play Nice? The Effects of Party and Political Ideology in Public Goods and Trust Games," Working Papers 0417, Department of Economics, University of Missouri.
    5. Lisa R. Anderson & Jennifer M. Mellor & Jeffrey Milyo, 2004. "Social Capital and Contributions in a Public-Goods Experiment," American Economic Review, American Economic Association, vol. 94(2), pages 373-376, May.
    6. Andre Hofmeyr & Justine Burns & Martine Visser, 2007. "Income Inequality, Reciprocity And Public Good Provision: An Experimental Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 508-520, September.
    7. Kerri Brick & Martine Visser, 2010. "Meeting a national emission reduction target in an experimental setting," Climate Policy, Taylor & Francis Journals, vol. 10(5), pages 543-559, September.
    8. Marianna Baggio & Luigi Mittone, 2015. "Grandparents Matter: Perspectives on Intergenerational Altruism. An Experiment on Family Dynamic Spillovers in Public Goods Games," CEEL Working Papers 1502, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.

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    More about this item

    Keywords

    inequality; group cohesion; public goods;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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