Will a government find it financially easier to neutralize a looming protest if more groups are involved?

We study a policy response to an increase in post-merger social stress. If a merger of groups of people is viewed as a revision of their social space, then the merger alters people’s comparators and increases social stress: the social stress of a merged population is greater than the sum of the levels of social stress of the constituent populations when apart. We use social stress as a proxy measure for looming social protest. As a response to the post-merger increase in social stress, we consider a policy aimed at reversing the negative effect of the merger by bringing the social stress of the merged population back to the sum of the pre-merger levels of social stress of the constituent populations when apart. We present, in the form of an algorithm, a cost-effective policy response which is publicly financed and does not reduce the incomes of the members of the merged population. We then compare the financial cost of implementing such a policy when the merger involves more or fewer groups. We show that the cost may fall as the number of merging groups rises.


Issue Date:
2016-08
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
ISSN: 1436-9931 (Other)
PURL Identifier:
http://purl.umn.edu/244570
Page range:
1-21
Total Pages:
21
JEL Codes:
D04; D63; F55; H53; P51
Series Statement:
DP
224




 Record created 2017-04-01, last modified 2017-08-29

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