Causes and Effects of Wealth Inequality: visibility leads to a tradeoff between social mobility and wealth satisfaction

Kazumi Shimizu, Yoshio Kamijo, Hiroki Ozono and Akira Goto
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Hiroki Ozono: Faculty of Law, Economic and Humanities, Kagoshima University
Akira Goto: School of Information and Communication, Meiji University

No 2017, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: Although the disparity of wealth is one of the most important topics in the modern world, our literature review shows little empirical or theoretical study examining its cause at the micro level. In the present study, by designing an economic experiment based on the investment (private goods provision) game, we focus on the effect of various economic information on the wealth accumulation by manipulating its visibility. Our main findings follow: first, when participants' wealth distribution is visible, and the endowment of investment is carried over, people, especially the disadvantaged, are more likely to invest; second, the active investment enables people to move frequently in the economic hierarchy of the group; and finally, people are less satisfied with their final results or wealth when the 2 wealth distribution is visible. It may follow that an important tradeoff between social mobility and wealth satisfaction is caused by the information visibility: the more transparent the people's economic performance, the more active the investment; the more fluidly people move in social layers, the less satisfied they are with their economic position.

Keywords: Disparity; Wealth; Investment game; Experiment; Information (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 M54 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2020-11
New Economics Papers: this item is included in nep-exp
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