On the psychology of poverty Haushofer, Johannes; Fehr, Ernst
Science (American Association for the Advancement of Science),
05/2014, Letnik:
344, Številka:
6186
Journal Article
Recenzirano
Poverty remains one of the most pressing problems facing the world; the mechanisms through which poverty arises and perpetuates itself, however, are not well understood. Here, we examine the evidence ...for the hypothesis that poverty may have particular psychological consequences that can lead to economic behaviors that make it difficult to escape poverty. The evidence indicates that poverty causes stress and negative affective states which in turn may lead to short-sighted and risk-averse decision-making, possibly by limiting attention and favoring habitual behaviors at the expense of goal-directed ones. Together, these relationships may constitute a feedback loop that contributes to the perpetuation of poverty. We conclude by pointing toward specific gaps in our knowledge and outlining poverty alleviation programs that this mechanism suggests.
How does our brain choose the best course of action? Choices between material goods are thought to be steered by neural value signals that encode the rewarding properties of the choice options. ...Social decisions, by contrast, are traditionally thought to rely on neural representations of the self and others. However, recent studies show that many types of social decisions may also involve neural value computations. This suggests a unified mechanism for motivational control of behaviour that may incorporate both social and non-social factors. In this Review, we outline a theoretical framework that may help to identify possible overlaps and differences between the neural processes that guide social and non-social decision making.
Neuroeconomics combines methods and theories from neuroscience psychology, economics, and computer science in an effort to produce detailed computational and neurobiological accounts of the ...decision-making process that can serve as a common foundation for understanding human behavior across the natural and social sciences. Because neuroeconomics is a young discipline, a sufficiently sound structural model of how the brain makes choices is not yet available. However, the contours of such a computational model are beginning to arise; and, given the rapid progress, there is reason to be hopeful that the field will eventually put together a satisfactory structural model. This paper has two goals: First, we provide an overview of what has been learned about how the brain makes choices in two types of situations: simple choices among small numbers of familiar stimuli (like choosing between an apple or an orange), and more complex choices involving tradeoffs between immediate and future consequences (like eating a healthy apple or a less-healthy chocolate cake). Second, we show that, even at this early stage, insights with important implications for economics have already been gained.
Although animal researchers established the role of testosterone as a ‘social hormone’ decades ago, the investigation of its causal influence on human social behaviors has only recently begun. Here, ...we review and discuss recent studies showing the causal effects of testosterone on social interactions in animals and humans, and outline the basic neurobiological mechanisms that might underlie these effects. Based on these recent findings, we argue that the role of testosterone in human social behavior might be best understood in terms of the search for, and maintenance of, social status.
Do people intuitively favour certain actions over others? In some dual-process research, reaction-time (RT) data have been used to infer that certain choices are intuitive. However, the use of ...behavioural or biological measures to infer mental function, popularly known as 'reverse inference', is problematic because it does not take into account other sources of variability in the data, such as discriminability of the choice options. Here we use two example data sets obtained from value-based choice experiments to demonstrate that, after controlling for discriminability (that is, strength-of-preference), there is no evidence that one type of choice is systematically faster than the other. Moreover, using specific variations of a prominent value-based choice experiment, we are able to predictably replicate, eliminate or reverse previously reported correlations between RT and selfishness. Thus, our findings shed crucial light on the use of RT in inferring mental processes and strongly caution against using RT differences as evidence favouring dual-process accounts.
Authority and power permeate political, social, and economic life, but empirical knowledge about the motivational origins and consequences of authority is limited. We study the motivation and ...incentive effects of authority experimentally in an authority-delegation game. Individuals often retain authority even when its delegation is in their material interest—suggesting that authority has nonpecuniary consequences for utility. Authority also leads to over-provision of effort by the controlling parties, while a large percentage of subordinates underprovide effort despite pecuniary incentives to the contrary. Authority thus has important motivational consequences that exacerbate the inefficiencies arising from suboptimal delegation choices.
Most previous studies on intertemporal labor supply found very small or insignificant substitution effects. It is possible that these results are due to constraints on workers' labor supply choices. ...We conducted a field experiment in a setting in which workers were free to choose hours worked and effort per hour. We document a large positive elasticity of overall labor supply and an even larger elasticity of hours, which implies that the elasticity of effort per hour is negative. We examine two candidate models to explain these findings: a modified neoclassical model with preference spillovers across periods, and a model with reference dependent, loss-averse preferences. With the help of a further experiment, we can show that only loss-averse individuals exhibit a negative effort response to the wage increase. (JEL J22, J31)
The presence of workers who reciprocate higher wages with greater effort can have important consequences for firms and labor markets. Knowledge about the extent and determinants of reciprocal effort ...choices is, however, incomplete. We investigate the role of fairness perceptions and social preferences in a field experiment in which workers were hired for a one-time job. We show that workers who perceive being underpaid at the base wage increase their performance if the hourly wage increases, whereas those who feel adequately paid or overpaid at the base wage do not change their performance. Moreover, we find that only the workers who display reciprocity in a choice experiment show reciprocal effort responses in the field. The workers who lack reciprocity in the choice experiment do not respond to the wage increase, even if they feel underpaid at the base wage. Our findings suggest that fairness perceptions and social preferences are key in workers' performance response to wage increases. In our study, the wage increase affects effort mainly through the removal of perceived unfairness, i.e., the elimination of negative reciprocity toward the firm, rather than positive reciprocity. These results are the first direct evidence of the fair-wage effort hypothesis in the field and also help interpret previous contradictory findings in the literature.
Data, as supplemental material, are available at
http://dx.doi.org/10.1287/mnsc.2014.1970
.
This paper was accepted by Uri Gneezy, behavioral economics.
Since Durkheim, sociological explanations of social cooperation have emphasized the internalization of values that induce norm compliance. Since Adam Smith, economic explanations of social ...cooperation have emphasized incentives that induce selfish individuals to cooperate. Here, we develop a general approach—the Beliefs, Preferences, and Constraints approach—showing that each of the above models is a special case. Our approach is based on evidence indicating that pure Homo Sociologicus and pure Homo Economicus views are wrong. We show that self-regarding and norm-regarding actors coexist and that the available action opportunities determine which of these actor types dominates the aggregate level of social cooperation. Our approach contributes to the solution of long-standing problems, including the problems of social order and collective action, the determinants and consequences of social exchanges, the microfoundations of emergent aggregate patterns of social interactions, and the measurement of the impact of cultural and economic practices on individuals' social goals.
Time Discounting and Wealth Inequality Epper, Thomas; Fehr, Ernst; Fehr-Duda, Helga ...
The American economic review,
04/2020, Letnik:
110, Številka:
4
Journal Article
Recenzirano
Odprti dostop
This paper documents a large association between individuals’ time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality ...administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences, and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.
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