Economic punishments and sanctions have been used against the Islamic Revolution of Iran as well as some other countries. But their efficacy is usually in dispute among politicians and economists. Current research reports the results of a randomized experiment that seeks to identify the cause of the failure of broad political punishments and sanctions. Most sanctions and political punishments are ultimately employed as a psychological-economic device. They are meant to adversely affect the opinion of the people of a country, thereby putting pressure on the government to change course. We propose and empirically test the hypothesis that a reduction of welfare has a different effect when it is attributed to an out-group versus an in-group agent. We find that when economic failure is believed to have been brought about by an outsider, it actually solidifies the position of the leader. There is, moreover, no statistically significant difference in the reactions across sexes. The study draws on insights from the sociology of group identity to propose an answer to an old question in political economy. There is, moreover, no statistically significant difference in the reactions across sexes. The study draws on insights from the sociology of group identity to propose an answer to an old question in political economy.
