Inequality, fairness and social capital

Inequality is often associated with negative societal consequences, but identifying a causal relationship is a daunting task. We provide evidence on the impact of unjust economic inequality on social interactions. Using a large-scale controlled experiment, we document that unjust inequality results...

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Bibliographic Details
Published in:European economic review 2020-10, Vol.129, p.103566, Article 103566
Main Authors: Fehr, Dietmar, Rau, Hannes, Trautmann, Stefan T., Xu, Yilong
Format: Article
Language:English
Subjects:
Equality
Experiment
Fairness
Inequality
Social aspects
Social capital
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Summary:Inequality is often associated with negative societal consequences, but identifying a causal relationship is a daunting task. We provide evidence on the impact of unjust economic inequality on social interactions. Using a large-scale controlled experiment, we document that unjust inequality results in a significant decline in trust and trustworthiness. This erosion of social capital is associated with pessimistic beliefs about others’ behavior and is muted if there is no direct link between the income-generating process and social interaction. Finally, our data do not support the view that higher status or wealth affects pro-social attitudes: the successful are always more generous, whereas unsuccessful persons display the least efficient and generous behavior regardless of the status of the person who they interact with.
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2020.103566