Identity and Redistribution: Theory and Evidence

Sanjit Dhami, Emma Manifold and Ali al‐Nowaihi

Economica, 2021, vol. 88, issue 350, 499-531

Abstract: We propose a theoretical model that embeds social identity concerns, as in Akerlof and Kranton (2000), with inequity averse preferences, as in Fehr and Schmidt (1999). We conduct an artefactual ultimatum game experiment with registered members of British political parties, for whom political identity is salient and redistribution is also likely to be salient. The empirical results are as follows. (1) Proposers and responders demonstrate ingroup‐favouritism. (2) Proposers exhibit quantitatively stronger social identity effects relative to responders. (3) As redistributive taxes increase, average offers by proposers and the average minimum acceptable offers of responders (both as a proportion of income) decline by almost the same amount, suggesting a shared understanding that is characteristic of social norms. (4) Subjects experience less disadvantageous inequity from ingroup members relative to outgroup members.

Date: 2021
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Citations: View citations in EconPapers (4)

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https://doi.org/10.1111/ecca.12352

Related works:
Working Paper: Identity and Redistribution: Theory and Evidence (2020)
Working Paper: Identity and Redistribution: Theory and Evidence (2019)
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