A Tale of Two Cities: An Experiment on Inequality and Preferences

Abstract

We study how differences in socioeconomic background correlate with preferences and beliefs, in a sample of college students born in a mid-sized Italian city. Our findings indicate that participants living in an area characterized by a high socioeconomic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, at least in part, driven by heterogeneities in beliefs: subjects from the most affluent part of the city have more optimistic expectations on their counterpart's trustworthiness than those living in a lower socioeconomic environment. By contrast, no significant differences emerge in other preferences: generosity, risk-attitudes, and time preferences. Finally, we do not find any systematic evidence of out-group discrimination based on neighborhood identity.

Was Banfield right? New insights from a nationwide laboratory experiment

“…As in Bigoni et al (2018), the is characterized by the reversal of roles in a sequential order. Each participant acts first as trustor and then as trustee.…”

To Segregate, or to Discriminate – That Is the Question: Experiment on Identity and Social Preferences

“…They find no evidence of statistical discrimination nor of a taste for discrimination, although on average, every stratum believes that members from different strata will discriminate them. In the second one, Bigoni and Rattini (2018) use an online experiment to assess whether disparities in SES within Bologna, Italy, correlate with trust, trustworthiness, and altruism. They do not encounter out-group discrimination in any of the games.…”