Inequality and Public Good Provision: An Experimental Analysis

Lisa Anderson (), Jennifer M. Mellor () and Jeffrey Milyo
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Lisa Anderson: Department of Economics, College of William and Mary

No 12, Working Papers from Department of Economics, College of William and Mary

Abstract: Recent studies report that economic inequality is associated with reduced government expenditures on social programs. Several prominent social scientists, including Putnam [2000], attribute this relationship to the detrimental Òpsychosocial effectsÓ of group heterogeneity on cooperation. We test the hypothesis that inequality within a group reduces individual contributions in a canonical public goods experiment. Unlike previous examinations of inequality and public good provision, our design introduces inequality by manipulating the levels and distributions of fixed payments given to subjects for participating in the experiment. When made salient through public information about each individualÕs standing within the group, inequality in the distribution of fixed payments reduces contributions to the public good for all group members.

Keywords: Inequality; Heterogeneity; Cooperation; Public goods; Experiments (search for similar items in EconPapers)
JEL-codes: C9 H4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-pbe
Date: 2004-12-15
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