Identity and Redistribution: Theory and Evidence

Sanjit Dhami, Emma Manifold () and Ali al-Nowaihi ()

No 19/04, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: We contribute to a growing literature on redistribution and identity. 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 both identity and redistribution are salient. The empirical results are as follows. (1) Proposers and responders demonstrate ingroup-favoritism. (2) Proposers exhibit quantitatively stronger social identity effects relative to responders. (3) As redistributive taxes increase, offers by proposers and the 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 more disadvantageous inequity from outgroup members relative to ingroup members.

Keywords: Social identity; prosocial behaviour; ultimatum game; fiscal redistribution; entitlements (search for similar items in EconPapers)
JEL-codes: D01 D03 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-gth, nep-hpe, nep-ltv, nep-soc and nep-upt
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Identity and Redistribution: Theory and Evidence (2021)
Working Paper: Identity and Redistribution: Theory and Evidence (2020)
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