Greasing the wheels: Pork and public goods contributions in a legislative bargaining experiment

• We assume a legislature divides a fixed budget between pork projects and a public good.
• We show that inequity aversion typically decreases payoff inequity and proposal power.
• This does not always increase public goods spending because equilibrium coalitions change with inequity aversion.
• We conduct a laboratory experiment and show that the data closely coincides with the predictions.
• The experiment also examines the prediction that a higher taste for pork can increase public goods spending.

When a legislature bargains over funds for pork and public goods, and the funds come from a common budget, increased spending on the public good means greater payoff equality since it comes at the expense of pork. This paper explores whether inequity aversion then leads to greater public goods spending. Using both theory and a laboratory experiment we show inequity aversion generally decreases inequity within a coalition by limiting proposer power. However, this does not always mean greater public goods contributions because the types of proposals passed change in equilibrium. In addition, the experiment investigates the theoretical prediction that increasing players’ relative preference for pork can increase public goods contributions. We show that while average public goods contributions remain unchanged, there is evidence at the individual level that subjects hold out for higher public goods contributions as predicted.