A Tale of Two Cities: An Experiment on Inequality and Preferences
Quaderni - Working Paper DSE N° 1128
55 Pages Posted: 3 Apr 2019
Date Written: March 8, 2019
We study how differences in socio-economic 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 socio-economic 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 socio-economic 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.
Keywords: Socio Economic Status, Beliefs, Generosity, Risk attitudes, Time preferences, Trust, Trustworthiness
JEL Classification: C90, D31, D63, R23
Suggested Citation: Suggested Citation