Old habits die hard: The experience of inequality and persistence of low cooperation

Abhijit Ramalingam and Brock Stoddard

No 20-07, Working Papers from Department of Economics, Appalachian State University

Abstract: Inequality reduces the ability of communities to work together. The theory of reciprocity suggests reducing inequality allows groups to increase cooperation. We experimentally test if, after experiencing inequality, unconditional income transfers to the poor increase contributions to public goods. Pure redistribution to eliminate inequality does not raise cooperation in groups that experienced inequality. Even additional resources directed to the poor without reducing resources of the rich fail to raise cooperation beyond levels observed in groups that were always equal. The experience of inequality locks groups in a low-level cooperation trap that they are unable to escape, despite moves towards equality. Key Words: reciprocity; inequality reduction; income transfers; cooperation; public goods; experiment

JEL-codes: C91 C92 D31 D63 H41 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cbe and nep-exp
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