National inequality, social capital, and public goods decision-making

Abstract

Inequality affects how people make social decisions. Laboratory research has shown that when income inequality is simulated using cooperative economic games, groups with higher inequality often generate less wealth overall, with poorer group members receiving the worst outcomes. This study links these experimental findings to real world inequality and applies a decision model to explain the effects in terms of social decision-making dynamics. Using a pre-existing dataset from 255 groups playing a public goods game in thirteen economically diverse societies, we show that in nations with higher inequality, groups contribute less (Research question (RQ) 1). Further, we find that higher inequality is associated with lower optimism regarding others’ contributions at the outset of the game and increased sensitivity to others’ contributions, which accelerates the decay of cooperation (RQ2). These effects might be explained by national differences in social capital as expressed by trust and adherence to civic norms (RQ3). Using the European Values Survey, we replicate the negative association between inequality and contributions to a public good by examining national volunteering rates (RQ4).