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Abstract

Inequality not only generates status differentials between rich and poor individuals, it also generates status differentials between groups of different composition and income level. We organise the social structure within which groups are embedded to manipulate their composition and relative status, thus inducing weaker or stronger group identities in their members via the processes of social categorization, identification and comparison. We therefore manipulate the fundamental components of group identity rather than resorting to ad hoc identity reinforcement tasks. How strongly individuals identify with each group will ultimately determine the degree of cooperativeness within the group and the whole society.

We find that the impact of inequality on social cooperativeness is not trivial: cooperation varies with the strength of the group’s identity as predicted by social identity theory. In particular, high endowment homogeneous groups cooperate most and increasingly over time. Low endowment homogeneous groups display intermediate levels of cooperation. Heterogeneous groups cooperate least, a result driven by lack of cooperation on behalf of the rich. As endowment sizes and groups are exogenously allocated, we argue that our findings are a lower bound for the effects generated where endowments and groups are endogenously determined, in or outside of the laboratory.