IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v166y2019icp785-807.html
   My bibliography  Save this article

The anatomy of distributional preferences with group identity

Author

Listed:
  • Müller, Daniel

Abstract

The increasing diversity of societies raises questions about the consequences for redistributive preferences. This paper assesses the impact of social identity on distributional preferences in a modified dictator game. I estimate individual-level utility functions with two parameters that govern the trade-offs between equity and efficiency and giving to self and to other. Subjects on average put less weight on income of the out-group. The out-group treatment also changes the distribution of equity-efficiency concerns. However, the experiment also uncovers a large individual heterogeneity of preferences. An analysis of GARP violations reveals that choices in both treatments overwhelmingly stem from well-behaved, yet systematically different underlying utility functions. Hence, the evidence presented here suggests that the rational choice approach is a useful tool for understanding the effect of social identity on preferences.

Suggested Citation

  • Müller, Daniel, 2019. "The anatomy of distributional preferences with group identity," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 785-807.
    • Handle: RePEc:eee:jeborg:v:166:y:2019:i:c:p:785-807
    DOI: 10.1016/j.jebo.2019.09.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268119302835
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2019.09.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Maria Porter & Abi Adams, 2016. "For Love or Reward? Characterising Preferences for Giving to Parents in an Experimental Setting," Economic Journal, Royal Economic Society, vol. 126(598), pages 2424-2445, December.
    2. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, October.
    3. Federico Echenique & Sangmok Lee & Matthew Shum, 2011. "The Money Pump as a Measure of Revealed Preference Violations," Journal of Political Economy, University of Chicago Press, vol. 119(6), pages 1201-1223.
    4. Charness, Gary & Gneezy, Uri & Kuhn, Michael A., 2012. "Experimental methods: Between-subject and within-subject design," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 1-8.
    5. Ian Crawford & Bram De Rock, 2014. "Empirical Revealed Preference," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 503-524, August.
    6. Tor Eriksson & Lei Mao & Marie Claire Villeval, 2017. "Saving face and group identity," Experimental Economics, Springer;Economic Science Association, vol. 20(3), pages 622-647, September.
    7. Hedegaard, Morten & Kerschbamer, Rudolf & Müller, Daniel & Tyran, Jean-Robert, 2021. "Distributional preferences explain individual behavior across games and time," Games and Economic Behavior, Elsevier, vol. 128(C), pages 231-255.
    8. James Andreoni & Lise Vesterlund, 2001. "Which is the Fair Sex? Gender Differences in Altruism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 293-312.
    9. Alesina, Alberto & Di Tella, Rafael & MacCulloch, Robert, 2004. "Inequality and happiness: are Europeans and Americans different?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2009-2042, August.
    10. Raymond Fisman & Shachar Kariv & Daniel Markovits, 2007. "Individual Preferences for Giving," American Economic Review, American Economic Association, vol. 97(5), pages 1858-1876, December.
    11. Erzo F. P. Luttmer, 2001. "Group Loyalty and the Taste for Redistribution," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 500-528, June.
    12. Mark Dean & Daniel Martin, 2016. "Measuring Rationality with the Minimum Cost of Revealed Preference Violations," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 524-534, July.
    13. repec:hal:pseose:halshs-01157487 is not listed on IDEAS
    14. Fisman, Raymond & Jakiela, Pamela & Kariv, Shachar, 2015. "How did distributional preferences change during the Great Recession?," Journal of Public Economics, Elsevier, vol. 128(C), pages 84-95.
    15. William T. Harbaugh & Kate Krause & Timothy R. Berry, 2001. "GARP for Kids: On the Development of Rational Choice Behavior," American Economic Review, American Economic Association, vol. 91(5), pages 1539-1545, December.
    16. Joan Costa-Font & Frank Cowell, 2015. "Social Identity And Redistributive Preferences: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(2), pages 357-374, April.
    17. Syngjoo Choi & Raymond Fisman & Douglas Gale & Shachar Kariv, 2007. "Consistency, Heterogeneity, and Granularity of Individual Behavior under Uncertainty," Economics Working Papers 0076, Institute for Advanced Study, School of Social Science.
    18. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    19. N. Gregory Mankiw, 2015. "Yes, r > g. So What?," American Economic Review, American Economic Association, vol. 105(5), pages 43-47, May.
    20. Alan J. Auerbach & Kevin Hassett, 2015. "Capital Taxation in the Twenty-First Century," American Economic Review, American Economic Association, vol. 105(5), pages 38-42, May.
    21. Francesca Gioia, 2017. "Peer effects on risk behaviour: the importance of group identity," Experimental Economics, Springer;Economic Science Association, vol. 20(1), pages 100-129, March.
    22. Gary Charness & Luca Rigotti & Aldo Rustichini, 2007. "Individual Behavior and Group Membership," American Economic Review, American Economic Association, vol. 97(4), pages 1340-1352, September.
    23. Kei Tsutsui & Daniel Zizzo, 2014. "Group status, minorities and trust," Experimental Economics, Springer;Economic Science Association, vol. 17(2), pages 215-244, June.
    24. Francesco Guala & Antonio Filippin, 2017. "The Effect of Group Identity on Distributive Choice: Social Preference or Heuristic?," Economic Journal, Royal Economic Society, vol. 127(602), pages 1047-1068, June.
    25. Donna Harris & Benedikt Herrmann & Andreas Kontoleon & Jonathan Newton, 2015. "Is it a norm to favour your own group?," Experimental Economics, Springer;Economic Science Association, vol. 18(3), pages 491-521, September.
    26. Ernst Fehr & Michael Naef & Klaus M. Schmidt, 2006. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments: Comment," American Economic Review, American Economic Association, vol. 96(5), pages 1912-1917, December.
    27. Lorenz Goette & David Huffman & Stephan Meier, 2006. "The Impact of Group Membership on Cooperation and Norm Enforcement: Evidence Using Random Assignment to Real Social Groups," American Economic Review, American Economic Association, vol. 96(2), pages 212-216, May.
    28. Grosskopf, Brit & Pearce, Graeme, 2017. "Discrimination in a deprived neighbourhood: An artefactual field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 29-42.
    29. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    30. Bart Smeulders & Laurens Cherchye & Bram De Rock & Frits C. R. Spieksma, 2013. "The Money Pump as a Measure of Revealed Preference Violations: A Comment," Journal of Political Economy, University of Chicago Press, vol. 121(6), pages 1248-1258.
    31. Ryan D. Enos, 2016. "What the Demolition of Public Housing Teaches Us about the Impact of Racial Threat on Political Behavior," American Journal of Political Science, John Wiley & Sons, vol. 60(1), pages 123-142, January.
    32. Fisman, Raymond & Jakiela, Pamela & Kariv, Shachar, 2017. "Distributional preferences and political behavior," Journal of Public Economics, Elsevier, vol. 155(C), pages 1-10.
    33. Syngjoo Choi & Raymond Fisman & Douglas Gale & Shachar Kariv, 2007. "Consistency and Heterogeneity of Individual Behavior under Uncertainty," American Economic Review, American Economic Association, vol. 97(5), pages 1921-1938, December.
    34. Kerschbamer, Rudolf & Müller, Daniel, 2020. "Social preferences and political attitudes: An online experiment on a large heterogeneous sample," Journal of Public Economics, Elsevier, vol. 182(C).
    35. Thomas Piketty, 2015. "About Capital in the Twenty-First Century," American Economic Review, American Economic Association, vol. 105(5), pages 48-53, May.
    36. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
    37. Dimitri Landa & Dominik Duell, 2015. "Social Identity and Electoral Accountability," American Journal of Political Science, John Wiley & Sons, vol. 59(3), pages 671-689, July.
    38. Klor, Esteban F. & Shayo, Moses, 2010. "Social identity and preferences over redistribution," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 269-278, April.
    39. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't the US Have a European-Style Welfare System?," NBER Working Papers 8524, National Bureau of Economic Research, Inc.
    40. Federico Cingano, 2014. "Trends in Income Inequality and its Impact on Economic Growth," OECD Social, Employment and Migration Working Papers 163, OECD Publishing.
    41. Lee, Woojin & Roemer, John E., 2006. "Racism and redistribution in the United States: A solution to the problem of American exceptionalism," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1027-1052, August.
    42. Ada Ferrer-i-Carbonell & Xavier Ramos, 2014. "Inequality And Happiness," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 1016-1027, December.
    43. John A. List, 2007. "On the Interpretation of Giving in Dictator Games," Journal of Political Economy, University of Chicago Press, vol. 115(3), pages 482-493.
    44. Chambers,Christopher P. & Echenique,Federico, 2016. "Revealed Preference Theory," Cambridge Books, Cambridge University Press, number 9781107087804, September.
    45. Christina M. Fong & Erzo F. P. Luttmer, 2009. "What Determines Giving to Hurricane Katrina Victims? Experimental Evidence on Racial Group Loyalty," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 64-87, April.
    46. Douglas M. Gale & Shachar Kariv & Syngjoo Choi & Raymond Fisman, 2007. "Revealing Preferences Graphically: An Old Method Gets a New Tool Kit," American Economic Review, American Economic Association, vol. 97(2), pages 153-158, May.
    47. Roland Bénabou & Jean Tirole, 2011. "Identity, Morals, and Taboos: Beliefs as Assets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(2), pages 805-855.
    48. Fong, Christina M. & Luttmer, Erzo F.P., 2011. "Do fairness and race matter in generosity? Evidence from a nationally representative charity experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 372-394, June.
    49. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 715-753.
    50. Alexander W. Cappelen & Astri Drange Hole & Erik Ø Sørensen & Bertil Tungodden, 2007. "The Pluralism of Fairness Ideals: An Experimental Approach," American Economic Review, American Economic Association, vol. 97(3), pages 818-827, June.
    51. Paetzel, Fabian & Sausgruber, Rupert, 2018. "Cognitive ability and in-group bias: An experimental study," Journal of Public Economics, Elsevier, vol. 167(C), pages 280-292.
    52. Orr, Larry L, 1976. "Income Transfers as a Public Good: An Application to AFDC," American Economic Review, American Economic Association, vol. 66(3), pages 359-371, June.
    53. Carol Graham & Andrew Felton, 2006. "Inequality and happiness: Insights from Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 107-122, April.
    54. Woojin Lee & John Roemer & Karine Van der Straeten, 2006. "Racism, Xenophobia, and Redistribution," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 446-454, 04-05.
    55. Helen Bernhard & Ernst Fehr & Urs Fischbacher, 2006. "Group Affiliation and Altruistic Norm Enforcement," American Economic Review, American Economic Association, vol. 96(2), pages 217-221, May.
    56. David N. Weil, 2015. "Capital and Wealth in the Twenty-First Century," American Economic Review, American Economic Association, vol. 105(5), pages 34-37, May.
    57. Glenn Harrison & E. Rutström, 2009. "Expected utility theory and prospect theory: one wedding and a decent funeral," Experimental Economics, Springer;Economic Science Association, vol. 12(2), pages 133-158, June.
    58. Adrian Bruhin & Helga Fehr-Duda & Thomas Epper, 2010. "Risk and Rationality: Uncovering Heterogeneity in Probability Distortion," Econometrica, Econometric Society, vol. 78(4), pages 1375-1412, July.
    59. Sippel, Reinhard, 1997. "An Experiment on the Pure Theory of Consumer's Behaviour," Economic Journal, Royal Economic Society, vol. 107(444), pages 1431-1444, September.
    60. Nicholas Bardsley, 2008. "Dictator game giving: altruism or artefact?," Experimental Economics, Springer;Economic Science Association, vol. 11(2), pages 122-133, June.
    61. Shayo, Moses, 2009. "A Model of Social Identity with an Application to Political Economy: Nation, Class, and Redistribution," American Political Science Review, Cambridge University Press, vol. 103(2), pages 147-174, May.
    62. Roy Chen & Yan Chen, 2011. "The Potential of Social Identity for Equilibrium Selection," American Economic Review, American Economic Association, vol. 101(6), pages 2562-2589, October.
    63. Yan Chen & Sherry Xin Li, 2009. "Group Identity and Social Preferences," American Economic Review, American Economic Association, vol. 99(1), pages 431-457, March.
    64. Holger Stichnoth & Karine Van der Straeten, 2013. "Ethnic Diversity, Public Spending, And Individual Support For The Welfare State: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 27(2), pages 364-389, April.
    65. Lane, Tom, 2016. "Discrimination in the laboratory: A meta-analysis of economics experiments," European Economic Review, Elsevier, vol. 90(C), pages 375-402.
    66. Jonathan David Ostry & Andrew Berg & Charalambos G Tsangarides, 2014. "Redistribution, Inequality, and Growth," IMF Staff Discussion Notes 14/02, International Monetary Fund.
    67. Chen, Yan & Li, Sherry Xin & Liu, Tracy Xiao & Shih, Margaret, 2014. "Which hat to wear? Impact of natural identities on coordination and cooperation," Games and Economic Behavior, Elsevier, vol. 84(C), pages 58-86.
    68. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bauer, Kevin, 2020. "How did we do? The impact of relative performance feedback on intergroup hostilities," SAFE Working Paper Series 281, Leibniz Institute for Financial Research SAFE.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Müller, 2017. "The anatomy of distributional preferences with group identity," Working Papers 2017-02, Faculty of Economics and Statistics, Universität Innsbruck, revised Mar 2017.
    2. Marie Claire Villeval, 2021. "Group Identity and Social Preferences by Yan Chen and Sherry X. Li," Post-Print halshs-03504258, HAL.
    3. Marie Claire Villeval, 2021. "Group Identity and Social Preferences (chapter X)," Post-Print halshs-03504316, HAL.
    4. Fuhai Hong & Yohanes E. Riyanto & Ruike Zhang, 2022. "Multidimensional social identity and redistributive preferences: an experimental study," Theory and Decision, Springer, vol. 93(1), pages 151-184, July.
    5. Suchon, Rémi & Villeval, Marie Claire, 2019. "The effects of status mobility and group identity on trust," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 430-463.
    6. Rémi Suchon & Marie Claire Villeval, 2017. "Does upward mobility harm trust?," Post-Print halshs-01659021, HAL.
    7. Paetzel, Fabian & Sausgruber, Rupert, 2018. "Cognitive ability and in-group bias: An experimental study," Journal of Public Economics, Elsevier, vol. 167(C), pages 280-292.
    8. Bauer, Kevin, 2020. "How did we do? The impact of relative performance feedback on intergroup hostilities," SAFE Working Paper Series 281, Leibniz Institute for Financial Research SAFE.
    9. Gauriot, Romain & Heger, Stephanie A. & Slonim, Robert, 2020. "Altruism or diminishing marginal utility?," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 24-48.
    10. Erik Lindqvist & Robert Östling, 2013. "Identity and redistribution," Public Choice, Springer, vol. 155(3), pages 469-491, June.
    11. Dimant, Eugen, 2015. "On Peer Effects: Behavioral Contagion of (Un)Ethical Behavior and the Role of Social Identity," MPRA Paper 68732, University Library of Munich, Germany.
    12. Benistant, Julien & Villeval, Marie Claire, 2019. "Unethical behavior and group identity in contests," Journal of Economic Psychology, Elsevier, vol. 72(C), pages 128-155.
    13. Laurent Denant-Boemont & Matthieu Leprince & Matthieu Pourieux, 2019. "Distributive Preferences of Public Representatives: A Field-in-the-Lab Experiment," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2019-05-ccr, Condorcet Center for political Economy.
    14. Joan Costa-i-Font & Frank Cowell, 2015. "European Identity and Redistributive Preferences," CESifo Working Paper Series 5412, CESifo.
    15. Morita, Hodaka & Servátka, Maroš, 2013. "Group identity and relation-specific investment: An experimental investigation," European Economic Review, Elsevier, vol. 58(C), pages 95-109.
    16. Jiang, Jiang & Li, Sherry Xin, 2019. "Group identity and partnership," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 202-213.
    17. Barr, Abigail & Lane, Tom & Nosenzo, Daniele, 2018. "On the social inappropriateness of discrimination," Journal of Public Economics, Elsevier, vol. 164(C), pages 153-164.
    18. Schütt, Christoph A. & Pipke, David & Detlefsen, Lena & Grimalda, Gianluca, 2023. "Does ethnic heterogeneity decrease workers’ effort in the presence of income redistribution? An experimental analysis," European Journal of Political Economy, Elsevier, vol. 79(C).
    19. Dziewulski, Paweł, 2020. "Just-noticeable difference as a behavioural foundation of the critical cost-efficiency index," Journal of Economic Theory, Elsevier, vol. 188(C).
    20. Pawel Dziewulski, 2021. "A comprehensive revealed preference approach to approximate utility maximisation," Working Paper Series 0621, Department of Economics, University of Sussex Business School.

    More about this item

    Keywords

    Social identity; Inequality; Distributional preferences; GARP; Rationality; In-group–outgroup bias;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H80 - Public Economics - - Miscellaneous Issues - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:166:y:2019:i:c:p:785-807. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.