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Does reducing inequality increase cooperation?

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  • Ramalingam, Abhijit
  • Stoddard, Brock V.

Abstract

Inequality reduces the ability of communities to work together. Recent policy proposals seem to presume that reducing inequality may allow groups to improve outcomes. We experimentally test if, after experiencing inequality, pure redistribution to eliminate inequality increases contributions to public goods. It does not; it fails to raise cooperation even to levels observed in groups that were always equal. The former rich continue to keep most of their resources for private consumption. An analysis of group members’ beliefs about others’ contributions reveals that, after receiving additional resources, the poor mimic the contribution behaviour of the rich. This shift towards private consumption renders redistribution ineffective in raising cooperation.

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  • Ramalingam, Abhijit & Stoddard, Brock V., 2024. "Does reducing inequality increase cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 170-183.
    • Handle: RePEc:eee:jeborg:v:217:y:2024:i:c:p:170-183
    DOI: 10.1016/j.jebo.2023.10.029
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    1. Ramalingam, Abhijit & Stoddard, Brock V., 2024. "Inequality reduction and cooperation: Injection of additional resources," Economics Letters, Elsevier, vol. 237(C).

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    More about this item

    Keywords

    Redistribution; 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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