Inequality, fairness and social capital

Dietmar Fehr*, Hannes Rau, Stefan T. Trautmann, Yilong Xu

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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. 
Original languageEnglish
Article number103566
JournalEuropean Economic Review
Volume129
DOIs
Publication statusPublished - Oct 2020

Keywords

  • Inequality
  • Fairness
  • Social capital
  • Experiment
  • INCOME INEQUALITY
  • PREFERENCES
  • BEHAVIOR
  • ORGANIZATION
  • PERFORMANCE
  • MOBILITY
  • EARNINGS
  • CHILDREN
  • TRENDS
  • PAY

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