Skip to main content
    • Aa
    • Aa

Why Does Ethnic Diversity Undermine Public Goods Provision?


A large and growing literature links high levels of ethnic diversity to low levels of public goods provision. Yet although the empirical connection between ethnic heterogeneity and the underprovision of public goods is widely accepted, there is little consensus on the specific mechanisms through which this relationship operates. We identify three families of mechanisms that link diversity to public goods provision—what we term “preferences,” “technology,” and “strategy selection” mechanisms—and run a series of experimental games that permit us to compare the explanatory power of distinct mechanisms within each of these three families. Results from games conducted with a random sample of 300 subjects from a slum neighborhood of Kampala, Uganda, suggest that successful public goods provision in homogenous ethnic communities can be attributed to a strategy selection mechanism: in similar settings, co-ethnics play cooperative equilibria, whereas non-co-ethnics do not. In addition, we find evidence for a technology mechanism: co-ethnics are more closely linked on social networks and thus plausibly better able to support cooperation through the threat of social sanction. We find no evidence for prominent preference mechanisms that emphasize the commonality of tastes within ethnic groups or a greater degree of altruism toward co-ethnics, and only weak evidence for technology mechanisms that focus on the impact of shared ethnicity on the productivity of teams.

Corresponding author
James Habyarimana is Assistant Professor, Georgetown Public Policy Institute, Georgetown University, 3520 Prospect St., Suite 308A, Washington, DC 20007 (
Macartan Humphreys is Assistant Professor, Department of Political Science, Columbia University, 420 West 118th St., #701, New York, NY 10027 (
Daniel N. Posner is Associate Professor, Department of Political Science, University of California, Los Angeles, Los Angeles, CA 90095 (
Jeremy M. Weinstein is Assistant Professor, Department of Political Science, Stanford University, Encina Hall West, Room 100, Stanford, CA 94305 (
Hide All
Alesina Alberto, Reza Baqir, and William Easterly. 1999. “Public Goods and Ethnic Divisions.” Quarterly Journal of Economics 114 (November): 124384.
Alesina Alberto, and Eliana LaFerrara. 2002. “Who Trusts Others?Journal of Public Economics 85 (August): 207234.
Alesina Alberto, and Eliana LaFerrara. 2005. “Ethnic Diversity and Economic Performance.” Journal of Economic Literature 63 (September): 762800.
Axtell Robert, H. M. Epstein, and H. P. Young. 2001. “Emergence of Class Norms in a Multi-Agent Model of Bargaining.” In Social Dynamics, ed. S. Durlauf and H. P. Young. Cambridge: MIT Press.
Bahry Donna, and Rick Wilson. Forthcoming. “Confusion or Fairness in the Field? Rejections in the Ultimatum Game under the Strategy Method.” Journal of Economic Behavior and Organization.
Banerjee Abhijit, Lakshmi Iyer and Rohini Somanathan, 2005, History, Social Divisions and Public Goods in Rural India, Journal of the European Economic Association 3 (April-May), 63947.
Bates Robert. 1973. Ethnicity in Contemporary Africa. Syracuse: Program in East African Studies.
Becker Gary. 1957. The Economics of Discrimination. Chicago: University of Chicago Press.
Besley Timothy, Stephen Coate, and Glenn Loury. 1993. “The Economics of Rotating Savings and Credit Associations.” American Economic Review 83 (September): 792810.
Bohnet Iris, and Bruno Frey. 1999. “Social Distance and Other-Regarding Behavior in Dictator Games: Comment.” American Economic Review 89 (March): 33539.
Bolton Gary E., and Axel Ockenfels. 2000. “ERC: A Theory of Equity, Reciprocity, and Competition.” American Economic Review 90 (March): 16693.
Bowles Samuel, and Herbert Gintis. 2004a. “Persistent Parochialism: Trust and Exclusion in Ethnic Networks.” Journal of Economic Behavior and Organization 55 (September): 123.
Bowles Samuel, and Herbert Gintis. 2004b. “The Evolution of Strong Reciprocity: Cooperation in Heterogeneous Populations.” Theoretical Population Biology 65 (February): 1728.
Camerer Colin F. 2003. Behavioral Game Theory: Experiments in Strategic Interaction. Princeton: Princeton University Press.
Cederman Lars-Erik, and Luc Girardin. 2007. “Beyond Fractionalization: Mapping Ethnicity onto Nationalist Insurgencies.” American Political Science Review 101 (February): 17385.
Chandra Kanchan. 2004. Why Ethnic Parties Succeed: Patronage and Ethnic Headcounts in India. New York: Cambridge University Press.
Charness Gary, and Uri Gneezy. 2000. “What's in a Name? Anonymity and Social Distance in dictator and Ultimatum games.” Unpublished manuscript, University of California, Santa Barbara.
Crawford Vincent P., and Hans Haller. 1990. “Learning How to Cooperate: Optimal Play in Repeated Coordination Games.” Econometrica 58 (May): 57195.
Deutsch Karl. 1966. Nationalism and Social Communication. Cambridge: The MIT Press.
Fafchamps Marcel. 2000. “Ethnicity and Credit in African Manufacturing.” Journal of Development Economics 61 (February): 20535.
Fearon James D. 1999. “Why Ethnic Politics and ‘Pork’ Tend to Go Together?Unpublished manuscript, Stanford University.
Fearon James D., and David D. Laitin. 1996. “Explaining Interethnic Cooperation.” American Political Science Review 90 (December): 71535.
Fehr Ernst, and Urs Fischbacher. 2004. “Third-Party Punishment and Social Norms.” Evolution and Human Behavior 25 (March): 6387.
Fehr Ernst, and Klaus Schmidt. 1999. “A Theory of Fairness, Competition, and Cooperation.” Quarterly Journal of Economics 114 (August): 81768.
Fershtman Chaim, and Uri Gneezy. 2001. “Discrimination in a Segmented Society: An Experimental Approach.” Quarterly Journal of Economics 116 (February): 35177.
Fowler James H. 2006. “Altruism and Turnout.” Journal of Politics 68 (August): 67483.
Ghosh Parkishit, and Debraj Ray. 1996. “Cooperation in Community Interaction without Information Flows.” Review of Economic Studies 63 (July): 491519.
Gil Francisco. 2004. “Ultimatum Game with an Ethnicity Manipulation: Results from Kohvdiin Bulgan Sum, Mongolia.” In Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies. Joseph Henrich, Robert Boyd, Samuel Bowles, Colin Camerer, Ernst Fehr and Herbert Gintis, eds. New York: Oxford University Press.
Golooba-Mutebi Frederick. 2003. “Devolution and Outsourcing of Municipal Services in Kampala City, Uganda: An Early Assessment.” Public Administration and Development 23 (December): 40518.
Greif Avner. 1989. “Reputations and Coalitions in Medieval Trade: Evidence on the Maghribi Traders.” Journal of Economic History 49 (December): 85782.
Greif Avner. 1994. “Cultural Beliefs and the Organization of Society.” Journal of Political Economy 102 (October): 91250.
Greig Fiona, and Iris Bohnet. 2006. “Why Women Cooperate with Women and not Men: Evidence from a Slum in Nairobi, Kenya.” Unpublished manuscript, Kennedy School of Government.
Güth Werner, and Hartmut Kliemt. 1998. “The Indirect Evolutionary Approach: Bridging the Gap between Rationality and Adaptation.” Rationality and Society 10 (August): 37799.
Habyarimana James, Macartan Humphreys, Daniel N. Posner, and Jeremy Weinstein. 2004. “Ethnic Identifiability: An Experimental Approach.” Unpublished manuscript, UCLA.
Haley Kevin, and Daniel Fessler. 2005. “Nobody's Watching? Subtle Cues Affect Generosity in an Anonymous Economic Game.” Evolution and Human Behavior 26 (May): 24556.
Hardin Russell. 1995. One for All: The Logic of Group Conflict. Princeton: Princeton University Press.
Henrich Joseph, Robert Boyd, Samuel Bowles, Colin Camerer, Ernst Fehr, and Herbert Gintis. 2004. Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies. New York: Oxford University Press.
Hoffman Elizabeth, Kevin McCabe, and Vernon L. Smith, 1996, “Social Distance and Other-Regarding Behavior in Dictator Games.” American Economic Review 86 (June): 65360.
Kahneman Daniel, Jack Knetsch, and Richard Thaler. 1986. “Fairness as a Constraint on Profit Seeking: Entitlements in the Market.” American Economic Review 76 (September): 72841.
Khwaja Asim. 2002. “Can Good Projects Succeed in Bad Communities? Collective Action in the Himalayas.” Unpublished manuscript, Harvard University.
Miguel Edward. 1999. “Ethnic Diversity, Mobility, and School Funding: Theory and Evidence from Kenya.” Unpublished manuscript, Harvard University.
Miguel Edward, and Mary Kay Gugerty. 2005. “Ethnic Diversity, Social Sanctions, and Public Goods in Kenya.” Journal of Public Economics 89 (December): 232568.
Mozaffar Shaheen, James R. Scarritt, and Glen Galaich. 2003. “Electoral Institutions, Ethnopolitical Cleavages, and Party Systems in Africa's Emerging DemocraciesAmerican Political Science Review 97 (August) 37990.
Onyach-Olaa Martin. 2003. “The Challenges of Implementing Decentralization: Recent Experiences in Uganda.” Public Administration and Development 23 (January): 10513.
Ostrom Elinor. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. New York: Cambridge University Press.
Ostrom Elinor. 2000. “Collective Action and the Evolution of Social Norms.” Journal of Economic Perspectives 14 (Summer): 13758.
Posner Daniel N. 2005. Institutions and Ethnic Politics in Africa. New York: Cambridge University Press.
Poterba James. 1997. “Demographic Structure and the Political Economy of Public Education.” Journal of Fiscal Analysis and Management 16 (Winter): 4866.
Spolaore Enrico, and Romain Wacziarg. 2006. “The Diffusion of Development.” Unpublished manuscript, Stanford University.
Tajfel Henri. 1974. “Intergroup Behavior, Social Comparison and Social Change.” Katz-Newcomb Lectures, University of Michigan, Ann Arbor.
Whitt Sam, and Rick Wilson. 2006. “Fairness and Ethnicity in the Aftermath of Ethnic Conflict: The Dictator Game in Bosnia-Herzegovina.” Unpublished Manuscript, Rice University.
Vigdor Jacob. 2004. “Community Composition and Collective Action: Analyzing Initial Mail Response to the 2000 Census.” Review of Economics and Statistics 86: 1: 30312.
Yamagishi Toshio. 2007. “The Social Exchange Heuristic: A Psychological Mechanism That Makes a System of Generalized Exchange Self-Sustaining.” In Cultural and Ecological Foundations of the Mind. Mark Radford, Susumu Ohnuma, and Toshio Yamagishi, eds. Sapporro: Hokkaido University Press.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

American Political Science Review
  • ISSN: 0003-0554
  • EISSN: 1537-5943
  • URL: /core/journals/american-political-science-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 38
Total number of PDF views: 844 *
Loading metrics...

Abstract views

Total abstract views: 2000 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 24th October 2017. This data will be updated every 24 hours.