The Effect of Financial Constraints on In-Group Bias : Evidence from Rice Farmers in Thailand

In-group bias and parochialism can be detrimental for communities and economic development. We study the causal effect of financial constraints on in-group bias in prosocial behaviors—cooperation, norm enforcement, and sharing—among low-income rice farmers in rural Thailand, who cultivate and harvest rice once a year. We use a between-subjects design—randomly assigning participants to experiments either before harvest (more financially constrained) or after harvest. Farmers interacted with either partner from their own village (in-group) or from another village (out-group). We find that in-group bias in cooperation and norm enforcement is not increased by financial constraints. In contrast, parochialism tends to exist only after harvest, that is, when people are less financially constrained