IDEAS home Printed from https://ideas.repec.org/a/eee/soceco/v68y2017icp130-139.html
   My bibliography  Save this article

Skewness-adjusted social preferences: Experimental evidence on the relation between inequality, elite behavior, and economic efficiency

Author

Listed:
  • Paetzel, Fabian
  • Traub, Stefan

Abstract

In this paper, we model social preferences as a function of the skewness of the distribution of initial endowments. Skewness is a measure of the asymmetry of the distribution of endowments around the mean. We argue that skewness reflects the social distance between ‘elite’ players with high initial endowments and other players with lower endowments, better than variance and concentration measures like the Gini-coefficient. We hypothesize that elite players become more selfish with increasing skewness and therefore contribute less to a public good in the framework of a one-shot non-linear public good game. The results of an experimental test, in which we systematically vary the distribution of endowments between treatments, confirm that the model is able to correctly explain the observed pattern of contribution behavior. We find that cooperation and efficiency are lowest with right-skewed distribution of endowments. Our paper therefore improves the understanding of the behavioral link between inequality and efficiency.

Suggested Citation

  • Paetzel, Fabian & Traub, Stefan, 2017. "Skewness-adjusted social preferences: Experimental evidence on the relation between inequality, elite behavior, and economic efficiency," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 68(C), pages 130-139.
    • Handle: RePEc:eee:soceco:v:68:y:2017:i:c:p:130-139
    DOI: 10.1016/j.socec.2017.05.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2214804317300435
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.socec.2017.05.001?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. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    3. Thomas Piketty, 2015. "Putting Distribution Back at the Center of Economics: Reflections on Capital in the Twenty-First Century," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 67-88, Winter.
    4. Jennifer Zelmer, 2003. "Linear Public Goods Experiments: A Meta-Analysis," Experimental Economics, Springer;Economic Science Association, vol. 6(3), pages 299-310, November.
    5. Davis, Douglas D. & Holt, Charles a., 1993. "Experimental economics: Methods, problems and promise," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 8(2), pages 179-212.
    6. Balafoutas, Loukas & Kocher, Martin G. & Putterman, Louis & Sutter, Matthias, 2013. "Equality, equity and incentives: An experiment," European Economic Review, Elsevier, vol. 60(C), pages 32-51.
    7. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    8. Ben Greiner, 2015. "Subject pool recruitment procedures: organizing experiments with ORSEE," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 114-125, July.
    9. Alexander W. Cappelen & James Konow & Erik ?. S?rensen & Bertil Tungodden, 2013. "Just Luck: An Experimental Study of Risk-Taking and Fairness," American Economic Review, American Economic Association, vol. 103(4), pages 1398-1413, June.
    10. Hargreaves Heap, Shaun P. & Ramalingam, Abhijit & Stoddard, Brock V., 2016. "Endowment inequality in public goods games: A re-examination," Economics Letters, Elsevier, vol. 146(C), pages 4-7.
    11. R. Mark Isaac & James M. Walker, 1988. "Group Size Effects in Public Goods Provision: The Voluntary Contributions Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(1), pages 179-199.
    12. Cherry, Todd L. & Kroll, Stephan & Shogren, Jason F., 2005. "The impact of endowment heterogeneity and origin on public good contributions: evidence from the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 357-365, July.
    13. Trautmann, Stefan T. & van de Kuilen, Gijs & Zeckhauser, Richard J., 2013. "Social Class and Un(ethical) Behavior: A Framework, with Evidence from a Large Population Sample," Working Paper Series rwp13-004, Harvard University, John F. Kennedy School of Government.
    14. Kenneth Chan & Stuart Mestelman & Robert Moir & R. Muller, 1999. "Heterogeneity and the Voluntary Provision of Public Goods," Experimental Economics, Springer;Economic Science Association, vol. 2(1), pages 5-30, August.
    15. R. Isaac & James Walker, 1998. "Nash as an Organizing Principle in the Voluntary Provision of Public Goods: Experimental Evidence," Experimental Economics, Springer;Economic Science Association, vol. 1(3), pages 191-206, December.
    16. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    17. Glaeser, Edward & Scheinkman, Jose & Shleifer, Andrei, 2003. "The injustice of inequality," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 199-222, January.
    18. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    19. Erlei, Mathias, 2008. "Heterogeneous social preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 436-457, March.
    20. Kenneth S. Chan & Stuart Mestelman & Rob Moir & R. Andrew Muller Moir, 1996. "The Voluntary Provision of Public Goods under Varying Income Distributions," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 54-69, February.
    21. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    22. Sutter, Matthias & Weck-Hannemann, Hannelore, 2003. "On the effects of asymmetric and endogenous taxation in experimental public goods games," Economics Letters, Elsevier, vol. 79(1), pages 59-67, April.
    23. Fehr, Ernst & Schmidt, Klaus M., 2006. "The Economics of Fairness, Reciprocity and Altruism - Experimental Evidence and New Theories," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 8, pages 615-691, Elsevier.
    24. Laury, Susan K. & Holt, Charles A., 2008. "Voluntary Provision of Public Goods: Experimental Results with Interior Nash Equilibria," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 84, pages 792-801, Elsevier.
    25. Anderson, Lisa R. & Mellor, Jennifer M. & Milyo, Jeffrey, 2008. "Inequality and public good provision: An experimental analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(3), pages 1010-1028, June.
    26. Oliver P. Hauser & David G. Rand & Alexander Peysakhovich & Martin A. Nowak, 2014. "Cooperating with the future," Nature, Nature, vol. 511(7508), pages 220-223, July.
    27. Reuben, Ernesto & Riedl, Arno, 2013. "Enforcement of contribution norms in public good games with heterogeneous populations," Games and Economic Behavior, Elsevier, vol. 77(1), pages 122-137.
    28. 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.
    29. Rondeau, Daniel & Poe, Gregory L. & Schulze, William D., 2005. "VCM or PPM? A comparison of the performance of two voluntary public goods mechanisms," Journal of Public Economics, Elsevier, vol. 89(8), pages 1581-1592, August.
    30. Keser, Claudia & Markstädter, Andreas & Schmidt, Martin & Schnitzler, Cornelius, 2014. "Social costs of inequality: Heterogeneous endowments in public-good experiments," University of Göttingen Working Papers in Economics 217, University of Goettingen, Department of Economics.
    31. Ananish Chaudhuri, 2011. "Sustaining cooperation in laboratory public goods experiments: a selective survey of the literature," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 47-83, March.
    32. Kenneth L. Sokoloff & Stanley L. Engerman, 2000. "Institutions, Factor Endowments, and Paths of Development in the New World," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 217-232, Summer.
    33. Brandts, Jordi & Schram, Arthur, 2001. "Cooperation and noise in public goods experiments: applying the contribution function approach," Journal of Public Economics, Elsevier, vol. 79(2), pages 399-427, February.
    34. Buckley, Edward & Croson, Rachel, 2006. "Income and wealth heterogeneity in the voluntary provision of linear public goods," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 935-955, May.
    35. Sadrieh, Abdolkarim & Verbon, Harrie A.A., 2006. "Inequality, cooperation, and growth: An experimental study," European Economic Review, Elsevier, vol. 50(5), pages 1197-1222, July.
    36. repec:hal:pseose:halshs-01207273 is not listed on IDEAS
    37. 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. 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.
    2. Bernasconi, Michele & Neunhoeffer, Frieder, 2023. "The income inequality trap: When redistributive preferences do not correct greater inequality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    3. Yilong Xu & Ginevra Marandola, 2023. "The (negative) effects of inequality on Social Capital," Journal of Economic Surveys, Wiley Blackwell, vol. 37(5), pages 1562-1588, December.
    4. Kittel, Bernhard & Kanitsar, Georg & Traub, Stefan, 2017. "Knowledge, power, and self-interest," Journal of Public Economics, Elsevier, vol. 150(C), pages 39-52.
    5. Paetzel, Fabian & Lorenz, Jan & Tepe, Markus, 2018. "Transparency diminishes framing-effects in voting on redistribution: Some experimental evidence," European Journal of Political Economy, Elsevier, vol. 55(C), pages 169-184.

    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. Kölle, Felix, 2015. "Heterogeneity and cooperation: The role of capability and valuation on public goods provision," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 120-134.
    2. Martin Kesternich & Andreas Lange & Bodo Sturm, 2018. "On the performance of rule-based contribution schemes under endowment heterogeneity," Experimental Economics, Springer;Economic Science Association, vol. 21(1), pages 180-204, March.
    3. Felix Koelle, 2012. "Heterogeneity and Cooperation in Privileged Groups: The Role of Capability and Valuation on Public Goods Provision," Cologne Graduate School Working Paper Series 03-08, Cologne Graduate School in Management, Economics and Social Sciences.
    4. Gangadharan, Lata & Nikiforakis, Nikos & Villeval, Marie Claire, 2017. "Normative conflict and the limits of self-governance in heterogeneous populations," European Economic Review, Elsevier, vol. 100(C), pages 143-156.
    5. Balafoutas, Loukas & Kocher, Martin G. & Putterman, Louis & Sutter, Matthias, 2013. "Equality, equity and incentives: An experiment," European Economic Review, Elsevier, vol. 60(C), pages 32-51.
    6. Kesternich, Martin & Lange, Andreas & Sturm, Bodo, 2014. "The impact of burden sharing rules on the voluntary provision of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 107-123.
    7. Gabriele Camera & Lukas Hohl & Rolf Weder, 2023. "Inequality as a barrier to economic integration? An experiment," Experimental Economics, Springer;Economic Science Association, vol. 26(2), pages 383-411, April.
    8. Kingsley, David C., 2016. "Endowment heterogeneity and peer punishment in a public good experiment: Cooperation and normative conflict," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 60(C), pages 49-61.
    9. Ramalingam, Abhijit & Stoddard, Brock V., 2024. "Does reducing inequality increase cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 170-183.
    10. Andreas Löschel & Dirk Rübbelke, 2014. "On the Voluntary Provision of International Public Goods," Economica, London School of Economics and Political Science, vol. 81(322), pages 195-204, April.
    11. De Geest, Lawrence R. & Kingsley, David C., 2021. "Norm enforcement with incomplete information," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 403-430.
    12. Abhijit Ramalingam & Brock V. Stoddard, 2021. "Does reducing inequality increase cooperation?​," GRU Working Paper Series GRU_2021_022, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    13. Reuben, Ernesto & Riedl, Arno, 2013. "Enforcement of contribution norms in public good games with heterogeneous populations," Games and Economic Behavior, Elsevier, vol. 77(1), pages 122-137.
    14. Carlo Gallier & Martin Kesternich & Bodo Sturm, 2017. "Voting for Burden Sharing Rules in Public Goods Games," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 535-557, July.
    15. Rod Falvey & Tom Lane & Shravan Luckraz, 2022. "On a mechanism that improves efficiency and reduces inequality in voluntary contribution games," Discussion Papers 2022-15, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    16. Spiller, Jörg & Ufert, Aneta & Vetter, Patrick & Will, Ulrike, 2016. "Norms in an asymmetric Public Good experiment," Economics Letters, Elsevier, vol. 142(C), pages 35-44.
    17. Marie Claire Villeval, 2012. "Contribution au bien public et préférences sociales : Apports récents de l'économie comportementale," Post-Print halshs-00681348, HAL.
    18. Brañas-Garza, Pablo & Molis, Elena & Neyse, Levent, 2021. "Exposure to inequality may cause under-provision of public goods: Experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 92(C).
    19. Guererk, Oezguer & Rockenbach, Bettina & Wolff, Irenaeus, 2010. "The effects of punishment in dynamic public-good games," MPRA Paper 22097, University Library of Munich, Germany.
    20. Markussen, Thomas & Sharma, Smriti & Singhal, Saurabh & Tarp, Finn, 2021. "Inequality, institutions and cooperation," European Economic Review, Elsevier, vol. 138(C).

    More about this item

    Keywords

    Experiment; Inequality; Social preferences; Elites; Non-linear public good game;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    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:soceco:v:68:y:2017:i:c:p:130-139. 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/inca/620175 .

    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.