Prosociality, Political Identity, and Redistribution of Earned Income: Theory and Evidence

40 Pages Posted: 31 Oct 2018

See all articles by Sanjit Dhami

Sanjit Dhami

University of Leicester

Emma Manifold

University of Leicester - Department of Economics

Ali al-Nowaihi

University of Leicester - Department of Economics

Date Written: 2018

Abstract

We explore the relation between social political identity and prosociality. We first construct a theoretical model to generate predictions for the behavior of players in an ultimatum game who are influenced by social political identity. Then we use a novel subject pool-registered members of British political parties - to play the ultimatum game, and test our predictions. Incomes can either be unearned and untaxed (Treatment 1) or earned, taxed, and redistributed (Treatment 2). We find that the choices of the proposers and the responders are consistent with social identity theory (higher offers and lower minimum acceptable offers to ingroup members) although proposers show quantitatively stronger social identity effects. Moving from Treatment 1 to Treatment 2, offers by proposers decline and the minimum acceptable offers by responders (both as a proportion of income) also decline by almost the same amount, suggesting shared understanding that is characteristic of social norms.

Keywords: social identity, prosocial behavior, ultimatum game, fiscal redistribution, entitlements

JEL Classification: D010, D030

Suggested Citation

Dhami, Sanjit and Manifold, Emma and al-Nowaihi, Ali, Prosociality, Political Identity, and Redistribution of Earned Income: Theory and Evidence (2018). Available at SSRN: https://ssrn.com/abstract=3275430 or http://dx.doi.org/10.2139/ssrn.3275430

Sanjit Dhami (Contact Author)

University of Leicester ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

HOME PAGE: http://www2.le.ac.uk/departments/economics/people/sdhami

Emma Manifold

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Ali Al-Nowaihi

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

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