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Old habits die hard: The experience of inequality and persistence of low cooperation

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  • Abhijit Ramalingam
  • Brock V. Stoddard

Abstract

Inequality reduces the ability of communities to work together. The theory of reciprocity suggests reducing inequality allows groups to increase cooperation. We experimentally test if, after experiencing inequality, unconditional income transfers to the poor increase contributions to public goods. Pure redistribution to eliminate inequality does not raise cooperation in groups that experienced inequality. Even additional resources directed to the poor without reducing resources of the rich fail to raise cooperation beyond levels observed in groups that were always equal. The experience of inequality locks groups in a low-level cooperation trap that they are unable to escape, despite moves towards equality. Key Words: reciprocity; inequality reduction; income transfers; cooperation; public goods; experiment

Suggested Citation

  • Abhijit Ramalingam & Brock V. Stoddard, 2020. "Old habits die hard: The experience of inequality and persistence of low cooperation," Working Papers 20-07, Department of Economics, Appalachian State University.
    • Handle: RePEc:apl:wpaper:20-07
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    More about this item

    Keywords

    reciprocity; inequality reduction; income transfers; cooperation; public goods; experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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