Affirmative Action: Within-group Inequality in Competitive Environments

Monday 25 March 2024, 12:20 pm - 1:20 pm

Inequality in wealth, income, and opportunities based on natural identities such as race and gender is widespread. One policy tool to ”level the playing field” is Affirmative Action (AA) policies, which leads to a higher willingness to compete for beneficiaries and no discouragement for non-beneficiaries. However, what happens when there are high-income/wealthy beneficiaries of AA based on natural identity, also called the “creamy layer”? Using an online experiment, we investigate the effect of the group- and income-based AA policies on willingness to compete, fairness perceptions about the AA policies, and policy choice as a social planner with both within- and between-group inequality. We find that within-group heterogeneity discourages non-beneficiaries, especially poor non-beneficiaries. We further find that even though group-based AA is the least fair, especially with within-group heterogeneity, participants prefer policies that benefit themselves even as a social planner. We also find that within-group heterogeneity in endowments leads to more hate towards the rich beneficiaries or the creamy layer. Apart from contributing to the academic literature addressing an essential question on inequality within groups, we provide evidence on why AA institutions should be chosen more carefully, considering the pre-existing inequalities within groups and not just between groups based on natural identities.

Monday 25 March 2024, 12:20 pm - 1:20 pm
EOS 01.610