Are Some People More Equal than Others? Experimental Evidence on Group Identity and Income Inequality

Abstract

We investigate the effects of group identity and income inequality on social preferences and polarization by means of a laboratory experiment. We split our subjects into two populations: in-group (representing ‘natives’) and out-group (‘migrants’). In-group subjects repeatedly vote whether an unemployment insurance should cover all, some, or no members of their group. By means of a two-by-two design we disentangle the effect of group identity from those of income inequality. Among others, our experiment yields the following findings: (1) subjects tend to vote for less inclusive insurance schemes when they sample a higher chance of employment; however, (2) in-group subjects with an ex ante more beneficial distribution of employment chances – relative to the out-group – are less selfish and vote for more inclusive insurance schemes; (3) ex ante more beneficial relative employment chances of in-group subjects also leads to less polarization; and (4) revelation and priming of group identity does not lead to discrimination against out-group ‘migrants’ but, on the contrary, can lead to more compassionate and inclusive attitudes.