Group Identity and Social Preferences∗

Identity is a central concept in the social sciences. In this study, we present a laboratory experiment that measures the effects of induced group identity on participant social preferences. We find that when participants are matched with an ingroup member (as opposed to an outgroup member) they show a 47% increase in charity concerns when they have a higher payoff and a 93% decrease in envy when they have a lower payoff. Likewise, participants are 19% more likely to reward an ingroup match for good behavior, but 13% less likely to punish an ingroup match for misbehavior. Furthermore, participants are significantly more likely to choose social-welfare-maximizing actions when matched with an ingroup member. All results are consistent with the hypothesis that participants are more altruistic towards an ingroup match. As a result, ingroup matching generates significantly higher expected earnings than outgroup matching.