We report the results of an experiment on voluntary contributions to a public good in which we implement a redistribution of the group endowment among group members in a lump sum manner. We study the impact of re- distribution on group contribution, on individuals’ contributions according to their endowment and on welfare. Our experimental results show that welfare increases when equality is broken, as predicted by theory (Itaya, De Meza & Myles, 1997), because the larger contribution of the rich subjects over- compensates the lower contribution of the poor subjects. Last but not least, agents’ behavior in situations of inequality of income, depends on initial con- ditions. In particular, the decisions of those who become poor seem to express a form of protest againts the new distribution of incomes: being poor is not the same thing as becoming poor.
The trade-off between welfare and equality in a public good experiment: do the poor need Robin Hood or the sheriff of Nottingham?
14 January 2014