Absolute versus Relative Poverty and Wealth: Cooperation in the Presence of Between-Group Inequality

Abstract While inequality in resource endowments has been shown to affect cooperation levels in groups, much of this evidence comes from studies of within-group inequality. In an online public goods experiment, we instead examine the effects of payoff-irrelevant inequality in resources between groups on cooperation within equal groups, i.e. the effect of mere exposure to inequality. When all groups are poor or rich, their contribution behaviour is very similar. Relative inequality, when poor and rich groups coexist, leads to lower contributions in rich groups. We find suggestive evidence that this may be related to stereotypes about the rich contributing less than the poor.