BRIQ Institute on Behavior and Inequality

This article studies the global variation in economic preferences. For this purpose, we present the Global Preference Survey (GPS), an experimentally validated survey data set of time preference, risk preference, positive and negative reciprocity, altruism, and trust from 80,000 people in 76 countries. The data reveal substantial heterogeneity in preferences across countries, but even larger within-country heterogeneity. Across individuals, preferences vary with age, gender, and cognitive ability, yet these relationships appear partly country specific. At the country level, the data reveal correlations between preferences and biogeo-graphic and cultural variables, such as agricultural suitability, language structure, and religion. Variation in preferences is also correlated with economic outcomes and behaviors. Within countries and subnational regions, preferences are linked to individual savings decisions, labormarket choices, and prosocial behaviors. Across countries, preferences vary with aggregate outcomes ranging from per capita income, to entrepreneurial activities, to the frequency of armed conflicts.

Preferences concerning time, risk, and social interactions systematically shape human behavior and contribute to differential economic and social outcomes between women and men. We present a global investigation of gender differences in six fundamental preferences. Our data consist of measures of willingness to take risks, patience, altruism, positive and negative reciprocity, and trust for 80,000 individuals in 76 representative country samples. Gender differences in preferences were positively related to economic development and gender equality. This finding suggests that greater availability of and gender-equal access to material and social resources favor the manifestation of gender-differentiated preferences across countries.

Governments around the world have implemented measures to manage the transmission of coronavirus disease 2019 (COVID-19). While the majority of these measures are proving effective, they have a high social and economic cost, and response strategies are being adjusted. The World Health Organization (WHO) recommends that communities should have a voice, be informed and engaged, and participate in this transition phase. We propose ten considerations to support this principle: (1) implement a phased approach to a 'new normal'; (2) balance individual rights with the social good; (3) prioritise people at highest risk of negative consequences; (4) provide special support for healthcare workers and care staff; (5) build, strengthen and maintain trust; (6) enlist existing social norms and foster healthy new norms; (7) increase resilience and self-efficacy; (8) use clear and positive language; (9) anticipate and manage misinformation; and (10) engage with media outlets. The transition phase should also be informed by real-time data according to which governmental responses should be updated.

A key question in the literature on motivated reasoning and self-deception is how motivated beliefs are sustained in the presence of feedback. In this paper, we explore dynamic motivated belief patterns after feedback. We establish that positive feedback has a persistent effect on beliefs. Negative feedback, instead, influences beliefs in the short run, but this effect fades over time. We investigate the mechanisms of this dynamic pattern, and provide evidence for an asymmetry in the recall of feedback. Finally, we establish that, in line with theoretical accounts, incentives for belief accuracy mitigate the role of motivated reasoning. (JEL C91, D83, D91)

This paper estimates peer effects in a university context where students are randomly assigned to sections. While students benefit from better peers on average, low-achieving students are harmed by high-achieving peers. Analyzing students’ course evaluations suggests that peer effects are driven by improved group interaction rather than adjustments in teachers’ behavior or students’ effort. Building on Angrist’s research, we further show that classical measurement error in a setting where group assignment is systematic can lead to a substantial overestimation of peer effects. However, when group assignment is random—like in our setting—peer effect estimates are biased toward zero.

Strategies aimed at reducing negative attitudes toward immigrants are at the core of integration policies. A large literature shows that misperceptions about the size and characteristics of immigrants are common. A few studies implemented interventions to correct innumeracy regarding the size of the immigrant population, but they did not detect any effects on attitudes. We study whether providing information not only about the size but also about the characteristics of the immigrant population can have stronger effects. We conduct two online experiments with samples from the United States, providing one-half of the participants with five statistics about immigration. This information bundle improves people's attitudes toward current legal immigrants. Most effects are driven by Republicans and other groups with more negative initial attitudes toward immigrants. In our second experiment, we show that treatment effects persist one month later. Finally, we analyze a large cross-country survey experiment to provide external validity to the finding that information about the size of the foreign-born population is not enough to change policy views. We conclude that people with negative views on immigration before the intervention can become more supportive of immigration if their misperceptions about the characteristics of the foreign-born population are corrected.

We study people’s subjective models of the macroeconomy and shed light on their attentional foundations. To do so, we measure beliefs about the effects of macroeconomic shocks on unemployment and inflation, providing respondents with identical information about the parameters of the shocks and previous realizations of macroeconomic variables. Within samples of 6, 500 US households and 1, 500 experts, beliefs are widely dispersed, even about the directional effects of shocks, and there are large differences in average beliefs between households and experts. Part of this disagreement seems to arise because respondents think of different propagation channels of the shocks, in particular demand- vs. supply-side mechanisms. We provide evidence on the role of associative memory in driving heterogeneity in thoughts and forecasts: contextual cues and prior experiences shape which propagation channels individuals retrieve and thereby which forecasts they make. Our findings offer a new perspective on the widely documented disagreement in macroeconomic expectations.

Many decisions of individuals involve a combination of internal preferences and mental processes related to cognitive ability. As Frederick (2005) argued in this journal, "there is no good reason for ignoring the possibility that general intelligence or various more specific cognitive abilities are important causal determinants of decision making." Since then, a number of empirical studies have focused on the relationship between cognitive ability and decision-making in different contexts. This paper will focus on the relationship between cognitive ability and decision-making under risk and uncertainty. Taken as a whole, this research indicates that cognitive ability is associated with risk-taking behavior in various contexts and life domains, including incentivized choices between lotteries in controlled environments, behavior in nonexperimental settings, and self-reported tendency to take risks. We begin by clarifying some important distinctions between concepts and measurement of risk preference and cognitive ability. In particular, complexity and possible confusions arise because observed measures of risk preference and cognitive ability are used to represent the latent characteristics of these concepts. We discuss the substantial (and somewhat implausible) range of assumptions that need to be satisfied in order to be able to interpret a correlation between measures of risk preference and cognitive ability as a relationship between latent risk preference and latent cognitive ability. Drawing causal inferences from such relationships raises additional challenges. We go on to argue that it is nevertheless important and valuable to study whether cognitive ability is related to measured risk preference (see also Dohmen, Falk, Huffman, and Sunde 2010). Risk preference is typically measured by risky behavior (actual or self-reported). If risky behavior varies systematically with cognitive ability, this may reinforce or counteract the impact of cognitive ability on life outcomes, depending on the nature of the correlation. If there is a relationship, it also becomes important to control for cognitive ability when relating life outcomes to standard revealed preference measures of risk preference. If cognitive ability has a causal impact on measured risk preference, it is important to understand the mechanism, and some intriguing policy implications arise. We then take stock of what is known empirically on the connections between cognitive ability and measured risk preferences, looking at studies using real-world risky behavior, experimental measures of risky choice, and self-reported measures of willingness to take risks. One pattern that emerges frequently in these studies is that cognitive ability tends to be positively correlated with avoidance of harmful risky situations, but it tends to be negatively correlated with risk aversion in advantageous situations. This suggests that the relationship between cognitive ability and risk taking has a reinforcing effect on economic outcomes. There is also intriguing emerging evidence that measured risk preference is particularly strongly related to certain facets of cognitive ability, those that facilitate quantitative problem solving, with implications for understanding mechanisms and possibly for better targeting policy interventions. We conclude by discussing perspectives for future research, in particular the scope for the development of richer sets of elicitation instruments and measurement across a wider range of concepts. We also consider progress in neuroscience, but conclude that at present that field still seems relatively far from allowing definitive conclusions about latent risk preference and cognitive ability. Nevertheless, the existing empirical evidence suggests that interventions to influence cognitive ability, should they be possible, might have spillovers on risky choice.

This paper explores inequalities in IQ and economic preferences between children from families of high and low socioeconomic status (SES). We document that children from high-SES families are more intelligent, patient, and altruistic as well as less risk seeking. To understand the underlying mechanisms, we propose a framework of how SES, parental investments, as well as maternal IQ and preferences influence a child’s IQ and preferences. Our results indicate that disparities in the level of parental investments hold substantial importance. In light of the importance of IQ and preferences for behaviors and outcomes, our findings offer an explanation for social immobility.

Studies of animals and plants suggest that nutritional conditions in one generation may affect phenotypic characteristics in subsequent generations. A small number of human studies claim to show that pre-pubertal nutritional experience trigger a sex-specific transgenerational response along the male line. A single historical dataset, the Överkalix cohorts in northern Sweden, is often quoted as evidence. To test this hypothesis on an almost 40 times larger dataset we collect harvest data during the pre-pubertal period of grandparents (G0, n = 9,039) to examine its potential association with mortality in children (G1, n = 7,280) and grandchildren (G2, n = 11,561) in the Uppsala Multigeneration Study. We find support for the main Överkalix finding: paternal grandfather's food access in pre-puberty predicts his male, but not female, grandchildren's all-cause mortality. In our study, cancer mortality contributes strongly to this pattern. We are unable to reproduce previous results for diabetes and cardiovascular mortality.

Abstract We study how the diffusion of being pivotal affects immoral outcomes. In our main experiment, subjects decide about agreeing to kill mice and receiving money versus objecting to the killing and foregoing the monetary amount. In a baseline condition, subjects decide individually about the life of one mouse. In the main treatment, subjects are organized into groups of eight and decide simultaneously. Eight mice are killed if at least one subject opts for killing. The fraction of subjects agreeing to kill is significantly higher in the main condition compared with the baseline condition. In a second experiment, we run the same baseline and main conditions but use a charity context and additionally study sequential decision-making. We replicate our finding from the mouse paradigm. We further show that the observed effects increase with experience, i.e., when we repeat the experiment for a second time. For both experiments, we elicit beliefs about being pivotal, which we validate in a treatment with non-involved observers. We show that beliefs are a main driver of our results.

Abstract We examine how income shocks affect the suicide rate in Indonesia. We use a difference-in-differences approach, exploiting the cash transfer's nationwide rollout, and corroborate the findings using a randomized experiment. Our estimates show that the cash transfers reduce the yearly suicide rate by 0.36 per 100,000 people, corresponding to an 18% decrease. Moreover, a different type of income shock, variability in agricultural productivity, also affects the suicide rate. The cash transfer program reduces the causal impact of the agricultural productivity shocks, suggesting an important role for policy interventions. Finally, we provide evidence for depression as a psychological mechanism.

The regression kink (RK) design is an increasingly popular empirical method for estimating causal effects of policies, such as the effect of unemployment benefits on unemployment duration. Using simulation studies based on data from existing RK designs, we empirically document that the statistical significance of RK estimators based on conventional standard errors can be spurious. In the simulations, false positives arise as a consequence of nonlinearities in the underlying relationship between the outcome and the assignment variable, confirming concerns about the misspecification bias of discontinuity estimators pointed out by Calonico, Cattaneo, and Titiunik. As a complement to standard RK inference, we propose that researchers construct a distribution of placebo estimates in regions with and without a policy kink and use this distribution to gauge statistical significance. Under the assumption that the location of the kink point is random, this permutation test has exact size in finite samples for testing a sharp null hypothesis of no effect of the policy on the outcome. We implement simulation studies based on existing RK applications that estimate the effect of unemployment benefits on unemployment duration and show that our permutation test as well as inference procedures proposed by Calonico, Cattaneo, and Titiunik improve upon the size of standard approaches, while having sufficient power to detect an effect of unemployment benefits on unemployment duration. Supplementary materials for this article are available online.

Abstract This article studies the relationship between patience and comparative development through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with per capita income and the accumulation of physical capital, human capital, and productivity. These correlations hold across countries, sub-national regions, and individuals. Second, the magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyse an overlapping generations model in which savings and education decisions are endogenous to patience, aggregate production is characterized by capital-skill complementarities, and productivity implicitly depends on patience through a human capital externality. In our model estimations, general equilibrium effects alone account for a non-trivial share of the observed amplification effects, and an extension to human capital externalities can quantitatively match the empirical evidence.

Abstract We study the effects of defaults on charitable giving in a large-scale field experiment on an online fundraising platform. We exogenously vary default options along two choice dimensions: the charitable donation decision and the “co-donation” decision regarding how much to contribute to supporting the platform. We document a strong effect of defaults on individual behavior but nevertheless find that aggregate donation levels are unaffected by defaults. In contrast, co-donations increase in the default amount. We complement our experimental results with a structural model that investigates whether personalizing defaults based on individuals' donation histories can increase donation revenues.

Many applied economic settings involve trade-offs between in-group members and strangers. To better understand decision making in these contexts, this paper measures and investigates the economic relevance of heterogeneity in moral universalism: the extent to which people exhibit the same level of altruism and trust toward strangers as toward in-group members. We first introduce a new experimentally validated, survey-based measure of moral universalism that is simple and easily scalable. We then deploy this tool in a large, representative sample of the U.S. population to study heterogeneity and economic relevance. We find that universalism is a relatively stable trait at the individual level. In exploratory analyses, heterogeneity in universalism is significantly related to observables: Older people, men, the rich, the rural, and the religious exhibit less universalist preferences and beliefs. Linking variation in universalism to self-reports of economic and social behaviors, we document the following correlations. Universalists donate less money locally, but more globally, and are less likely to exhibit home bias in equity and educational investments. In terms of social networks, universalists have fewer friends, spend less time with them, and feel more lonely. These results provide a blueprint for measuring moral universalism in applied settings and suggest that variation in universalism is relevant for understanding a myriad of economic behaviors. This paper was accepted by Yan Chen, behavioral economics and decision analysis.

Abstract Throughout the Western world, people’s policy views are correlated across domains in a strikingly similar fashion. This article proposes that what partly explains the structure of ideology is moral universalism: the extent to which people exhibit the same level of altruism and trust towards strangers as towards in-group members. In new large-scale multinational surveys, heterogeneity in universalism descriptively explains why some people support redistribution, health care, environmental protection, affirmative action, and foreign aid, while others advocate for spending on the military, law enforcement, and border protection. Universalism is a substantially stronger predictor of policy views and ideological constraints than variables such as income, wealth, education, religiosity, or beliefs about government efficiency. Consistent with the idea that universalism shapes policy views, we further document that the left–right divide on redistribution, environmental protection, or foreign aid strongly attenuates or even reverses when people evaluate less universalist implementations of these policies.

This paper shows that contemporary population-level heterogeneity in risk aversion, time preference, altruism, positive reciprocity, negative reciprocity, and trust partly traces back to the structure of the migration patterns of our very early ancestors. To document this pattern, we link differences in preferences between populations to the length of time elapsed since the ancestors of the respective groups broke apart from each other, as proxied by genetic and linguistic distance measures. Preference differences are significantly increasing in ancestral distance in both cross-country regressions and within-country analyses across groups of migrants.

Abstract We study people’s subjective models of the macroeconomy and shed light on their attentional foundations. To do so, we measure beliefs about the effects of macroeconomic shocks on unemployment and inflation, providing respondents with identical information about the parameters of the shocks and previous realizations of macroeconomic variables. Within samples of 6,500 US households and 1,500 experts, beliefs are widely dispersed, even about the directional effects of shocks, and there are large differences in average beliefs between households and experts. Part of this disagreement seems to arise because respondents think of different propagation channels of the shocks, in particular demand- vs. supply-side mechanisms. We provide evidence on the role of associative memory in driving heterogeneity in thoughts and forecasts: contextual cues and prior experiences shape which propagation channels individuals retrieve and thereby which forecasts they make. Our findings offer a new perspective on the widely documented disagreement in macroeconomic expectations.

Abstract This article shows that the intensity of violence in Rwanda’s recent past can be traced back to the initial establishment of its pre-colonial state. Villages that were brought under centralized rule one century earlier experienced a doubling of violence during the state-organized 1994 genocide. Instrumental variable estimates exploiting differences in the proximity to Nyanza—an early capital—suggest that these effects are causal. Before the genocide, when the state faced rebel attacks, with longer state presence, violence is lower. Using data from several sources, including a lab-in-the-field experiment across an abandoned historical boundary, I show that the effect of the historical state is primarily sustained by culturally transmitted norms of obedience. The persistent effect of the pre-colonial state interacts with government policy: where the state developed earlier, there is more violence when the Rwandan government mobilized for mass killing and less violence when the government pursued peace.