Working Paper

2015-05-28

Southern Africa Labour and Development Research Unit

University of Cape Town

We examine behavioural models involved in the provision of public goods when income inequality exists within groups. Our sample consists of individuals from urban and rural South African fishing communities. We find that behaviour observed in unequal groups does not accord with models of inequality aversion or egocentric altruism which require an equal distribution of final payoffs. On the other hand it is also not the case that individuals completely discount differences in initial allocations of wealth, as proposed by our absolute reciprocity model. Instead our empirical results lends support to a reciprocal model which requires that individuals contribute a proportional share of their initial endowments. Accordingly individuals are only partly held responsible for exogenous di®erences in initial wealth.

JEL Classification:C9, C72, D63, D64, H41, Z13

I would like to thank FORMAS for financial support. Martine Visser is Associate Professor within School of Economics at the University of Cape Town. She is on the Executive Committees of the Environmental–Economics Policy Research Unit (EPRU) and the Research Unit for Behavioral Economics and Neuroeconomics (RUBEN) and a research associate of the South African Labour and Development Research Unit (SALDRU). She is also on the Steering Committee for the African Climate Development Initiative (ACDI).