Why Does it Matter Who They Are? Fairness, Ingroup Favoritism, and Preferences for Redistribution

Abstract

Racially and ethnically fragmented societies are economically more unequal compared to homogeneous societies. Some political economists infer that who the poor are matters for whether the rich support redistribution. There is little consensus on why this is the case. One group of researchers attempts to identify the ``correct” channel through which social identity operates, another group disagrees over the motives driving such parochial preferences. Departing from these previous approaches, I argue that whether and how social identity influences redistribution preferences depends on the fairness ideal that people endorse. I test the interplay between fairness types and social identity mechanisms in the laboratory. My design allows for behavioral heterogeneity across fairness types, and for a distinction between preference-based and information-based identity mechanisms. Results suggest that participants adhere to liberal, parochial/luck egalitarian, and welfare maximizing principles of fairness. Only the parochial/luck egalitarian subgroup reveals ingroup favoritism. The evidence supports a preference-based explanation and suggest that information is important for absolute levels of inequality reduction.

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