5. Global Preferences Flashcards
What are economically important preferences?
-time preferences
-risk preferences
-positive/negative reciprocity
-altruism
-trust
What is conventional experimental economics methodology?
-controlled decision environment, described in instructions, no deception
-decisions normally anonymous, no communication
-paid according to decisions
Examples of measuring preferences using surveys
-representative panels: British household panel
-one off surveys of selected groups of interest: Yougov, Pew, Gallup
What are experimentally validated surveys?
They leverage the strength of surveys and experiments. They measure fundamental economic preferences using survey questions that predict behaviour in experimental measures of these preferences
How does Falk Et al 2023 use experimentally validated surveys?
-surveys and experiments at Uni of Bonn (n=409 students)
-standard economic experiments on risk taking, time discounting, altruism, trust, reciprocity, to obtain behaviourally valid preference measures
-2 groups with reversed order of experiments and surveys in week 1 and 2
What is the global preference survey project, Falk Et al 2018?
Representative survey of economic preferences
-76 countries, 90% of world’s population, 80,000 individuals
-monetary values for quantitative items adjusted along median household income across countries
-Pretests were conducted in 21 countries of various cultural heritage included in Gallup world poll 2012
Explain how the self assessment and quantitative measure of impatience, risk tolerance, reciprocity, trust, altruism work in the global preference survey project?
Self assessment: you are asked a question which says “how willing are you to…” on a scale of 0-10
Measurement: you choose between 5 sequential lots of two options. Usually a scale of 1-32
Results of self assessment and measurement of impatience in class
SA: mean 0.74
Measurement: mean 15.1
Measurement gives far greater value of patience than SA
Rho=0.05
Results of self assessment and measurement of risk tolerance in class
SA: mean 5.3
Measurement: 10.8 implied £108 is as good as 50/50 chance of £300
Rho=0.61
Results of self assessment and measurement of reciprocity in class
+ve reciprocity
SA: mean 8.3
Measurement: 18.3
-ve reciprocity (treats you unfairly)
SA: mean 4.8
-ve reciprocity (treats others unfairly)
SA: mean 5.4
The two measures of negative reciprocity are positively correlated rho=0.43
Results of self assessment and measurement of altruism
SA: mean 6.0
Measurement: 222 donated out of £1000
The two measures are positively but insignificantly correlated
Relationship between patience and gdp per capita and who found it?
Patience and GDP per capita are highly positively correlated (Dohmen Et al 2018)
What are the two competing hypotheses on gender differences in preferences? (Falk & Hermle 2018)
-Social role theory: gender differences in preference are smaller in more developed gender-egalitarian countries. Gender specific roles instill distinct preferences in women and men.
-Resource hypothesis: gender differences in preferences expand with economic development and gender equality. The unrestricted expression of preferences hinges upon availability of material and social resources
Thinking behind social role theory
Economic development is key for gender equality which is crucial for reducing traditional gender roles. Gender specific roles instill distinct preferences in men and women.
Thinking behind resource hypothesis
The unrestricted expression of preferences hinges upon availability of material and social resources. Greater availability of resources dominates gender neutral goal of subsistence, which creates scope for gender specific goals and ambitions. Economic development facilitates unfolding of differences in preferences between men and women
How are country level gender differences in preferences calculated?
Each preference measure was standardised at country level ((individual preference- country mean)/ st. dev)
From this the authors calculated a country level summary index of country level gender differences in preferences using principal component analysis
What is the relationship between all 6 preferences between gender differences and economic development?
The correlation is positive for all 6 preferences. There is also a positive relation between gender differences in preferences in relation to gender equality
What are WEIRD countries?
Western, Educated, Industrialised, Rich, Democratic
Which hypothesis do results on gender differences support?
Resource theory: gender differences in economic preferences increase with economic development and gender equality
Pros of cons of surveys compared to experiments
+can get very large sample sizes
-hypothetical answers, not incentivised
Summary of Global Preference Survey results
-GPS allows us to measure economic preferences in a fully comparable way around the world
-economic preferences differ strongly around the world
-individual characteristics influence economic preferences
-economic preferences are associated with important economic outcomes, such as savings and human capital decisions
-patience is particularly important for economic development
What do Croson & Gneezy (2009) find?
-males are more risk taking
-mixed evidence on social preferences
What papers are relevant to a question on surveys and global preferences?
-Falk Et Al (2023): experimentally validated surveys
-Falk Et Al (2018): global preference survey project
