Faculty of Business Seminar Series / Efşan Nas Özen

Title: From Hope to Rage: An Experiment on Inequality and Frustration

Abstract:

The stark increase in the within-country inequality appears to be linked to widespread discontent and frustration that can in turn fuel anger, social unrest, and protests. In an experiment, we study how the unequal distribution of monetary payoffs can trigger rage against people with whom there is no previous or expected future contact, in a form of punishment based on statistical discrimination. Differently from second and third-party punishment, the threat of indiscriminate punishment does not provide the potential victim any incentive to reduce inequality, and is not associated with any possible future gains for the perpetrator. We further investigate whether the prevalence of indiscriminate punishment only depends on the levels of inequality, or also on its sources. To do so, we compare an environment in which inequality is unilaterally determined by the rich, with one in which it results from the interplay of the rich and the poor.  We observe that indiscriminate punishment emerges when subjects are repeatedly exposed to high levels of inequality, and more so when the responsibility of inequality is solely on the rich.  We also find a difference in initial expectations: the rich are expected to be more generous when they bear full responsibility. As a consequence, the experience of the same level of inequality may lead to a higher degree of frustration and rage among the poor, as they had more optimistic expectations.

Place : Meeting Room AB2-345