As an academic, I've long been fascinated by the forces that drive collective action and erode social bonds. There has been a growing behavioural economic literature indicating that individuals exhibit social preferences which I comprehensively summarise in my recently written book on ‘Social Preferences’.
Relying on this literature showing that individuals are willing to sacrifice their own interest in order to promote social benefits (even in the absence of future material benefits), I explore how income inequality affect the way individuals are willing to cooperate in the presence of strong free riding incentives and the extent to which group identification, can act as a buffer, fostering a degree of social resilience. This blog post offers a more informal reflection on our recent work, sharing insights and opinions on this vital topic, which I believe holds significant relevance for scholars across diverse disciplines.
Our latest research on "Income inequality and group identification in public good games" (joint work with Zeyu Qiu) investigates the causal relationship between income inequality and cooperation, and more importantly, examines whether group identification plays a role in mediating this relationship. A substantial body of literature shows that advanced economies exhibit low levels of social capital like trust and cooperation, have simultaneously witnessed a surge in income inequality. However, establishing a clear causal link at the country level is hard to achieve.
We took advantage of the experimental methodology and implemented one-shot public good game scenarios with over 2,600 participants. Our decision to use experimental techniques allows us to isolate the effects of income inequality and observe its immediate impact on cooperative behaviour. The public good game, a well-established paradigm in the social preference literature, requires individuals to decide how much of their private resources to contribute to a common pool that benefits all group members, thus providing us with a simple measure of human cooperation.
In our experiments, participants were randomly assigned to groups of two and given either equal or unequal endowments of tokens. Following this, they decided about how much to contribute to a public good. Across three separate studies, we also employed different methods to measure group identification.
In our first study, we utilised a comprehensive 14-item questionnaire developed by Leach et al. (2008), a widely validated tool in psychology that breaks down in-group identification into five key components: self-stereotyping, in-group homogeneity, solidarity, satisfaction, and centrality. These components capture various facets of how individuals relate to their group, from perceiving themselves as typical members (self-stereotyping) and seeing similarity within the group (in-group homogeneity) to feeling emotional bonds (solidarity, satisfaction) and considering the group important to their identity (centrality).
Our second study adopted a different approach, employing the "Inclusion of Others in the Self" (IOS) scale and the “WE” scale. Both measures are designed to assess feelings of connectedness and closeness between individuals. Finally, our third study served as a crucial control, replicating the design of Study 2 but removing the group identification measures prior to the contribution decision to rule out any potential priming effects.
Our findings across these studies consistently revealed that income inequality significantly reduces cooperation in our one-shot public good games. This aligns with previous research suggesting that economic disparities can erode trust and willingness to contribute to the common good. The more novel aspect of our research lies in the evidence we found supporting the hypothesis that group identification mediates the negative effect of income inequality on cooperation. In both Study 1 and Study 2, we observed that groups with unequal income distribution reported lower levels of group identification compared to those with equal distribution. Furthermore, our mediation analysis indicated that this reduced sense of group identification partially explains the lower levels of cooperation in unequal groups.
The results of Study 3 were also illuminating. We found no significant differences in contribution behaviour between the studies with and without the prior group identification questionnaire. This suggests that our findings in Studies 1 and 2 were not simply an artefact of priming participants to think about their group membership before making their contribution decisions.
From the perspective of societal resilience, our research underscores the corrosive effects of income inequality on the very social fabric that enables collective action and mutual support. When economic disparities widen, individuals may feel less connected to their fellow citizens, leading to a decline in social capital indicators like collective cooperation.
However, our finding that group identification can mediate this negative relationship offers a glimmer of hope. It suggests that fostering a stronger sense of shared identity, belonging, and mutual support within communities might provide a pathway to building more resilient societies, even in the face of economic hardship. This could involve initiatives that promote social interaction, highlight shared values and goals, and cultivate a sense of connectedness that transcends economic differences.
In summary, our research provides novel causal evidence for the detrimental impact of income inequality on group identification and, consequently, on cooperation. The mediating role of group identification highlights the importance of social psychological factors in understanding how societies cope with economic disparities. By focusing on strategies that strengthen shared identities and foster a sense of community, we might be able to cultivate greater resilience in the face of the growing challenges posed by income inequality, ultimately contributing to a more cohesive and sustainable future for all.
Writer of this blog post is ROAM visiting Professor of Behavioural Economics Michalis Drouvelis from the University of Birmingham.
The Exploring resilience blog discusses the current themes of research, teaching and development of resilience, i.e., crisis resistance and deepens knowledge about the management of global change, and possible solutions to the wicked problems of sustainability. The authors are researchers and experts in the field, and members of the cooperation networks of the University of Oulu’s FRONT PROFI7 research programme.