Cooperation across the inequality divide: the effect of the magnitude of inequality

Cooperation has many economic and social benefits, yet it is vulnerable to inequality. This study examines how the magnitude of inequality affects cooperation, focusing on differences in behavior between individuals randomly assigned to high (i.e. the rich) and low endowments (i.e. the poor). To do so, we use a novel dataset that pools individual-level observations from 24 published experimental linear public good games with unequal endowments. Pooling many studies allows us to study the causal effect of inequality at the participant level, with a substantial variation in levels of inequality. Such a variation would be very hard to get with a single, properly powered experiment. We start by confirming that inequality reduces overall contributions, and that the rich contribute a lower share (“relative contribution”) of their endowment than the poor on average. We further identify a striking asymmetry: as inequality grows, the relative contributions of the rich decrease significantly, while the relative contributions of the poor are not significantly impacted. Therefore, the gap in contributions across statuses increases as inequality gets stronger. We provide a simple model of conditional cooperation that is compatible with our empirical findings. These results may inform the design of policies addressing inequality and social cohesion.