Invisible inequality leads to punishing the poor and rewarding the rich

How does lack of awareness of income inequality affect behaviour towards the rich and poor? To address this question, we assigned participants either at random or based on merit to one of five income levels (reflective of the U.S. income distribution), who then played a repeated public goods game with punishment, reward or both. When participants did not know the income distribution, they punished the poor and rewarded the rich. When incomes were known, conversely, participants punished the rich and rewarded the poor What explains this reversal? When incomes were hidden, participants punished those who gave the least in absolute amounts (the poor) and rewarded those who gave the most in absolute amounts (the rich). When incomes were revealed, however, participants were sensitive to people’s ability to contribute: they punished those who contributed the smallest percentage of their income (the rich) and rewarded those who contributed the highest percentage (the poor). Moreover, revealing incomes led to greater overall contributions to the public good, suggesting that awareness of inequality may offer societal benefits.