Inequality and visibility of wealth in experimental social networks

• Published in: Nature (London) Vol. 526; no. 7573; pp. 426 - 429
• Main Authors: Nishi, Akihiro, Shirado, Hirokazu, Rand, David G., Christakis, Nicholas A.
• Format: Journal Article
• Language: English
• Published: London Nature Publishing Group UK 15.10.2015; Nature Publishing Group
• Subjects: 631/181/1403; 631/181/2469; Cooperation; Cooperative Behavior; Disclosure; Economic aspects; Economic models; Economics; Equality; Experiments; Games, Experimental; Humanities and Social Sciences; Humans; Income; Inequality; Internet; letter; Models, Economic; multidisciplinary; Random Allocation; Science; Social Networking; Social networks; Social Welfare - psychology; Socioeconomic Factors; Wealth
• ISSN: 0028-0836; 1476-4687
• DOI: 10.1038/nature15392

Wealth inequality and wealth visibility can potentially affect overall levels of cooperation and economic success, and an online experiment was used to test how these factors interact; wealth inequality by itself did not substantially damage overall cooperation or overall wealth, but making wealth levels visible had a detrimental effect on social welfare. Conspicuous wealth undermines cooperation Wealth inequality and wealth visibility can both potentially affect levels of cooperation in a society and overall levels of economic success. Akihiro Nishi et al . use an online game to test how the two factors interact. Surprisingly, wealth inequality by itself did not damage cooperation or overall wealth as long as players do not know about the wealth of others. But when players' wealth was visible to others, inequality had a detrimental effect. Humans prefer relatively equal distributions of resources 1 , 2 , 3 , 4 , 5 , yet societies have varying degrees of economic inequality 6 . To investigate some of the possible determinants and consequences of inequality, here we perform experiments involving a networked public goods game in which subjects interact and gain or lose wealth. Subjects ( n = 1,462) were randomly assigned to have higher or lower initial endowments, and were embedded within social networks with three levels of economic inequality (Gini coefficient = 0.0, 0.2, and 0.4). In addition, we manipulated the visibility of the wealth of network neighbours. We show that wealth visibility facilitates the downstream consequences of initial inequality—in initially more unequal situations, wealth visibility leads to greater inequality than when wealth is invisible. This result reflects a heterogeneous response to visibility in richer versus poorer subjects. We also find that making wealth visible has adverse welfare consequences, yielding lower levels of overall cooperation, inter-connectedness, and wealth. High initial levels of economic inequality alone, however, have relatively few deleterious welfare effects.