4.1 Article

Exposure to inequality may cause under-provision of public goods: Experimental evidence

Journal

Publisher

ELSEVIER SCIENCE INC
DOI: 10.1016/j.socec.2021.101679

Keywords

Public Goods; Inequality; Cooperation; Information; Experiment

Categories

Funding

  1. Spanish State Research Agency (SRA) [PID2019110783GBI00/AEI/10.13039/501100011033]
  2. Spanish Government [PGC2018093506BI00]
  3. Andalusian Government [PY18-FR-0007]
  4. Leibniz Association [SAW2013IfW2, SAW-10868]
  5. German Research Foundation (DFG) [CRC TRR 190]

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Global economic inequality is on the rise, with individuals more exposed to such inequality than ever before due to advancements in information technologies and globalization. Studies suggest that exposure to inequality can shape economic decisions. Research findings reveal that knowledge of inequality in personal benefits between groups can impact contributions in public goods games, particularly eliciting stronger reactions from low benefit groups. However, this effect diminishes as the benefit difference between groups decreases.
Economic inequality is rising globally and due to developments in information technologies and globalization, nowadays individuals are more exposed to such an inequality than ever. Recent studies show that exposure to inequality may shape economic decisions. In this article, we test whether contributions in the public goods game are sensitive to information about inequality of personal benefits between groups. Our results show that learning the return levels of another group with higher (lower) benefits decreases (increases) the contributions with a stronger reaction by low benefit groups. Our further tests show that this effect diminishes when the benefit difference between the groups gets smaller. These results suggest that exposure to inequality might have a detrimental impact on public goods provision, yet this effect gets negligible as economic inequality reduces.

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