The Psychological Effects of Poverty on Social Capital

Abstract

Does poverty breed antisocial behavior? Maintaining high levels of social capital is necessary for individual well-being and successful economic development. Though poverty is one of the most critical problems facing the world, how poverty affects social relationships is not well understood. We addressed this question by conducting a randomized experiment examining the psychological effects of poverty on negative reciprocity and altruistic punishment. We recruited 1005 respondents from Amazon Mechanical Turk and exposed our treatment group to a prime that triggers feelings of poverty (Mani et al., 2013). We examined the effects of feeling poor on the behavior of the responder in an ultimatum game and on the behavior of the punisher in a third-party punishment game. We found that poverty primes significantly affected costless punishment but did not affect negative reciprocity or altruistic punishment even though they seemed to raise standards of fairness. We hypothesize that feeling poor can increase prosocial intentions that are not translated in action because of scarcity-induced focus.