Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

Abstract: As society becomes increasingly diverse, will changes in an individual’s exposure to diversity influence their interactions with others? I study prosocial behavior in a large-scale U.S. sample, where participants are exogenously exposed to social contexts with varying levels of nationality diversity. I find that diverse contexts amplify participants’ ingroup bias—the tendency to favor one’s own group—driven by increased allocations towards fellow nationals and decreased allocations to foreigners, relative to giving in homogeneous contexts where such bias is not present. A change in perceptions of social proximity corresponds to a driver of the effect of diversity in allocations. The findings are consistent across subgroups of the population, which suggests that the study identifies a general heuristic through which individuals identify with groups, where social context—and not only individual characteristics—is key for the emergence of ingroup bias.

Keywords: social context; diversity; prosocial behavior; ingroup biasM social proximity

JEL-codes: D64; D91

Language: English

65 pages, July 30, 2024

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