Inequality and Visibility of Wealth in Experimental Social Networks

Abstract

Humans prefer relatively equal distributions of resources 1–5, yet societies have varying degrees of economic inequality. To investigate some of the possible determinants and consequences of inequality, here we perform experiments involving a networked public goods game in which subjects interact and gain or lose wealth. Subjects (n 5 1,462) were randomly assigned to have higher or lower initial endowments, and were embedded within social networks with three levels of economic inequality (Gini coefficient 0.0, 0.2, and 0.4). In addition, we manipulated the visibility of the wealth of network neighbours. We show that wealth visibility facilitates the downstream consequences of initial inequality—in initially more unequal situations, wealth visibility leads to greater inequality than when wealth is invisible. This result reflects a heterogeneous response to visibility in richer versus poorer subjects. We also find that making wealth visible has adverse welfare consequences, yielding lower levels of overall cooperation, inter-connectedness, and wealth. High initial levels of economic inequality alone, however, have relatively few deleterious welfare effects.

Authors

• Akihiro Nishi
• Hirokazu Shirado
• David G. Rand
• Nicholas A. Christakis

Bibliography

A. Nishi, H. Shirado, D. G. Rand, and N. A. Christakis, “Inequality and Visibility of Wealth in Experimental Social Networks,” Nature, (Sep 2015) DOI: 10.1038/nature15392

Download Publication

• MS163
• Supplement
• Editorial: Behavioural economics: Visible inequality breeds more inequality
• Editorial: Money matters. It is not how much people have, it is how much we know they have that stokes inequality.

Code

• Nishi 2015 data and code

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