Inequality, group cohesion, and public good provision: an experimental analysis. Working Paper

Recent studies argue that inequality reduces group cohesiveness and dampens support for expenditures on public goods and social programs. In light of competing theoretical explanations and mixed empirical evidence of the effect of inequality on public goods provision, we conduct a test using a public goods experiment. 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 individual’s standing within the group, inequality in the distribution of fixed payments reduces contributions to the public good for all group members. Social scientists have long been intrigued by the relationship between inequality and well-being, but the last few years have witnessed a flurry of empirical scholarship that examines the effects of inequality on various economic, political and social indicators.1 One of the primary explanations for how inequality might negatively influence well-being is through it