Disclosure of Poverty Social Identity Reduces Effectiveness of Poverty Based Affirmative Action

Affirmative action (AA) has frequently been proposed as an intervention to enhance outcomes for disadvantaged groups. In the implementation of AA, significant emphasis is often placed on social identity. However, this study uncovers a surprising finding that the effectiveness of affirmative action is diminished when AA is implemented in conjunction with the salience of poverty as a social identity. Using a unique subject pool of officially identified poor and non-poor subjects, in a lab-in-the-field experiment, we experimentally investigate the impact of poverty based affirmative action on job participation decision and subsequent tournament entry decision. Our findings suggest that the implementation of AA by adding a bonus point for the poor does not result in a significant increase in job participation for the poor, compared to a scenario without intervention. However, we find that it is the disclosure of social identity that counteracts the positive effect of AA for poor individuals, leading to reduced participation. Conditional on participation, the implementation of AA and the disclosure of identity have negligible effects on competitive inclination. These findings indicate that making poverty identity salient incurs the cost of demotivating participation among poor individuals, thus weakening the effectiveness of AA policies for poverty reduction. This negative effect can be attributed to the potential negative stigma associated with the poverty label. Importantly, our results have significant implications for the design of AA policies aimed at poverty reduction.