Job Market Paper
Many personally risky decisions, such as innovation and entrepreneurship, have the potential to increase overall welfare by creating positive externalities for society. Rewarding such prosocial risk-taking may be an important strategy in addressing societal challenges like economic inequalities or the climate emergency through the creation of, for example, new jobs or technological advancements. A fundamental constraint for policy makers in rewarding such behaviour are however individuals’ distributive preferences. In this paper, I provide a theoretical framework and first experimental test of how distributive preferences are affected by potential positive externalities of risky behaviour. The results indicate that although individuals have a preference for rewarding prosocial risk-taking, they display outcome bias in doing so. Specifically, individuals reward prosocial risk-taking primarily if the positive externalities ultimately realised and do not compensate unlucky prosocial risk-takers. If outcomes are however unknown, prosocial risk-taking is significantly rewarded. These findings suggest that policies aimed at incentivising prosocial risk-takers ex ante will likely face fewer constraints than policies aimed at rewarding or compensating prosocial risk-takers ex post.
Non-selfish behaviour: Are social preferences or social norms revealed in distribution decisions? with Shaun Hargreaves Heap and Konstantinos Matakos [Poster] [5min Video]
People frequently choose to reduce own payoffs to help others. This non-selfish behavior is typically assumed to arise because people are motivated by social preferences. An alternative explanation is that they follow social norms. We test which of these two accounts can better explain subjects’ decisions in a simple distribution game. We find that norm-following explains people’s distributive choices better than social preferences, and lack of confidence in one’s social preference predicts norm-following.
How does the experience of social mobility affect people’s distributive preferences? Using cross-country survey data and a survey experiment, I examine the effects of experienced social mobility on support for redistribution. The results indicate an asymmetric relationship – experiencing downward mobility increases support for redistribution while experiencing upward mobility does not affect distributive preferences. This finding suggests a potential demand-side explanation for the Great Gatsby Curve: As overall absolute mobility decreases (increases), ceteris paribus, demand for redistribution also decreases (increases).
Why do (some) ordinary citizens support tax cuts for the rich? We use a randomized survey experiment in the US to identify the drivers of preferences for cutting taxes on the rich. We find that preferences for taxing the rich are fundamentally affected by information that shifts citizens’ core fairness beliefs, as well as information on the past trajectory of top tax rates.
Social preferences and the Value of Life: Evidence fairness matters with Shaun Hargreaves Heap, Christel Koop, Konstantinos Matakos and Asli Unan [5min Video]
In an online survey we elicit and compare the value of statistical life (VSL) using a standard willingness-to-pay (WTP) for a reduction in the personal chances of death with an analogous social planner type question that we design to engage better with people’s social preferences. Our results indicate that standard figures significantly underestimate the VSL that is appropriate for major policy interventions. Taking social preferences into account doubles the VSL.
Work in Progress
Distorted Fairness Beliefs: Motivating oneself or protecting one’s self-image – with Max Lobeck
Technological Change and Preferences for Redistribution – with David Hope and Julian Limberg
Good Inequality, Bad Inequality, and the Entitlement Effect – with Konstantinos Matakos
Good news reduces trust in government and its efficacy: The case of the Pfizer/BioNTech vaccine announcement with Shaun Hargreaves Heap, Christel Koop, Konstantinos Matakos and Asli Unan – PLOS ONE, 2021, 16(12). [Replication files]
Can Information Backfire? Facts, Beliefs, and the Health-Wealth Trade-off with Shaun Hargreaves Heap, Christel Koop, Konstantinos Matakos and Asli Unan [Politics JaM Podcast] [Vox EU]
Does information reduce partisan policy polarization? A survey experiment on post-pandemic fiscal policy preferences with Shaun Hargreaves Heap, Christel Koop, Konstantinos Matakos and Asli Unan [Washington Post]
Living through a pandemic: Economic and health concerns differentially affect social capital and policy preferences with Shaun Hargreaves Heap, Christel Koop, Konstantinos Matakos and Asli Unan