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Absolute versus Relative Poverty and Wealth: Cooperation in the Presence of Between-Group Inequality

Author

Listed:
  • Levi Eugenio

    (Department of Human Sciences, Link University, Rome, 00165, Italy)

  • Ramalingam Abhijit

    (Department of Economics, Walker College of Business, Appalachian State University, Boone, NC 28608, USA)

Abstract

While inequality in resource endowments has been shown to affect cooperation levels in groups, much of this evidence comes from studies of within-group inequality. In an online public goods experiment, we instead examine the effects of payoff-irrelevant inequality in resources between groups on cooperation within equal groups, i.e. the effect of mere exposure to inequality. When all groups are poor or rich, their contribution behaviour is very similar. Relative inequality, when poor and rich groups coexist, leads to lower contributions in rich groups. We find suggestive evidence that this may be related to stereotypes about the rich contributing less than the poor.

Suggested Citation

  • Levi Eugenio & Ramalingam Abhijit, 2025. "Absolute versus Relative Poverty and Wealth: Cooperation in the Presence of Between-Group Inequality," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 25(1), pages 99-113.
    • Handle: RePEc:bpj:bejeap:v:25:y:2025:i:1:p:99-113:n:1007
    DOI: 10.1515/bejeap-2024-0350
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    More about this item

    Keywords

    between-group; resource inequality; cooperation; public goods; online experiment; beliefs;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • 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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