Believe, But Verify? The Psychology of Poverty and Social Identity Economics in African Economies: Does Co-Ethnicity with the President Fuel Favoritism, and Which Political Settlements Can Distribute National Cake Benefits?

This study examines the interaction between the psychology of poverty, social identity economics, and political settlements in explaining whether co-ethnicity with the president fuels political favoritism in Africa, and how institutions can address it. It is based on a systematic review of 113 studies using the PRISMA protocol, drawing from development economics, behavioral economics, social identity theory, and political economy literature. Findings show that co-ethnic favoritism exists but is not universal. Poverty and scarcity reduce cognitive capacity , Social identity strongly shapes government resource allocation, with evidence of higher spending toward co-ethnic groups. Coethnicity with the president can fuel favoritism, though effects vary across countries. Inclusive political settlements reduce favoritism, while exclusive systems reinforce it. The study concludes that addressing this issue requires coordinated reforms. Inclusive, rule-based systems with power-sharing, accountability, and strong institutions are most effective in reducing favoritism and promoting fair governance. The study recommends that despite co-ethnicity with the president does fueling favoritism, although it is neither universal nor uniform, co-ethnicity with the president itself is not a problem, since it does not have heart or knowledge; rather, policymakers should reduce the rate of stereotypes (in-group "we" and out-group "they") to zero, put long-term public interest above short-term political survival, and boost path dependency.