Market integration, egalitarianism, and reward of merit: An experimental analysis from Papua New Guinea small-scale societies

Abstract

Extant literature proposes and finds empirical support for both a positive and a negative relationship between market integration and pro-sociality. According to a first strand of literature, market interactions help develop generalized pro-sociality, which extends to complete strangers the sense of particularized pro-sociality that is normally reserved to one’s family, clan, or kins in traditional societies. A second strand of theoretical literature posits that market interactions erode altruism. We test the relationship between market integration and tolerance of inequality – one relevant aspect of pro-sociality – in 30 villages of Bougainville, Papua New Guinea. Such villages were randomly selected from the census list within six groups differing upon the ease of access to the main market towns of the province. Since this society is transitioning from self-subsistence to market integration, it provides a suitable setting to test the above hypothesis. We measure tolerance of inequality through the “power-to-take” game, in which two players with different initial allocations make a proposal over how to divide the sum of initial earnings. A third impartial player also makes a proposal. We measure market integration through the share of calories coming from market purchases vis-à-vis self-subsistence.
Overall, we find no significant relationship between market integration and tolerance of inequality. Rather, behaviour seems highly variable in each village group. We find propensity for either egalitarian or non-egalitarian divisions both in relatively highly integrated and little integrated villages. Nonetheless, greater market integration seems to affect social norms justifying inequality and other mechanisms supporting cooperation. Joint paper with Andreas Pondorfer, Matthias Sutter, Katharina Werner.