Social Preferences, Norms and Culture

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Social Preferences, Norms and Culture

• Presentation to the Meetings of the
• Latin American Field Experiments Network
• November 21, 2008
• James Konow

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Disclosure Statement

• No previous studies conducted in or related to
  Latin America
• Laboratory experiments but no field experiments
• Latin American Field Experiments Network

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Disclosure Statement

• No previous studies conducted in or related to
  Latin America
• Laboratory experiments but no field experiments
• Latin American Field Experiments Network
• Plans to extend social preference research to the
  field in Latin America

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Overview of Research

• Theme Moral preferences and their consequences
• Impartiality and moral bias
• Equity/accountability principle
• Multi-criterion theory of distributive justice
• Fairness and risk
• Reciprocity and moral bias
• Happiness and morality
• Moral principles and moral norms across cultures
• Intersection of empirical research with normative
  ethics and public policy

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Accountability Principle

• Accountability Principle (JEBO 1996)
• An individuals fair allocation varies in direct
  proportion to the value of the relevant variables
  the individual controls (e.g., effort, choices)
  but does not hold the individual accountable for
  variables he/she cannot reasonably influence
  (endowed resources, innate skills)
• Implication fair allocations are proportional to
  controllable contributions but equalize
  differences that arise because of noncontrollable
  variables

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Illustration

• Suppose Amy and Bob work at the same job, and Amy
  is twice as productive as Bob
• Amys earnings should be twice Bobs if this
  productivity difference is due entirely to
  factors they both control like effort, choices
  about job training, etc.
• Fair allocations are equal, however, if Amys
  greater productivity is due entirely to variables
  they both cannot control like endowed resources,
  innate skills, etc.
• Attitudinal survey supports the fairness of
  allocations that comply with this principle and
  unfairness of allocations that violate it

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Theory and Experiment

• Social preference theory and experimental test
  (AER 2000)
• Theory incorporates fairness, self-interest and
  self-deception
• Fairness corresponds to accountability
• Moral bias deviation of behavior from moral
  principle because of self-interest
• Moral bias has two possible sources
• Unadulterated (i.e., acknowledged) self-interest
• Self-deception believing it is fair to be unfair
• Weights placed on fairness, self-interest and
  self-deception vary across individuals

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Experimental Test of Theory

• Dictator experiment consisting of two phases
• Phase 1
• All subjects generate earnings by preparing
  letters for mailing
• Subjects (A and B) are paired up, and their
  earnings are credited to a joint account assigned
  to each pair
• Phase 2
• For each pair, one subject (called the Dictator)
  is arbitrarily chosen to allocate the earnings
  between the two subjects

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Spectator Decisions

• The subjects chosen as Dictators varied with the
  treatment
• Spectator treatments
• For each A,B pair, a third party subject (C) was
  chosen to allocate earnings among A and B and was
  paid a fixed fee unrelated to this decision
• Predictions
• Dictators who are Spectators should be motivated
  only by fairness, since they have no stake in the
  earnings they are allocating
• Spectator allocations will reveal whether or not
  fairness corresponds to proportionality

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Results of Spectator Allocations

• Fraction of letters produced by A subjects are on
  horizontal axis
• Fraction of earnings allocated to A subjects are
  on vertical axis
• Proportional allocations lie on 45 degree line

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Stakeholder Decisions

• Stakeholder treatments
• One subject from each pair (A) was randomly
  chosen to allocate earnings between A and B
  (called the Recipient) no third party Dictator
• Predictions
• These Stakeholders will act on a combination of
  motives self-interest and fairness
• There will be differences in the weight placed on
  self-interest and fairness across individual
  subjects

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Results of Stakeholder Allocations

• Fraction of letters produced by the Dictator (A)
  are on horizontal axis
• Fraction of earnings taken by the Dictator are on
  vertical axis
• Fair allocations lie on 45 degree line
• Self-interested ones lie in the shaded triangle
  above this line

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When Variables Are Not under Control

• Two additional treatments in same study
  contributions are not under individual control
• Subjects now have enough time to prepare all
  letters, i.e., they produce equal numbers of
  letters
• Money created differs, however, because of
  arbitrary differences in the per letter credits
  that always favored the A subjects
• Results
• Spectator allocations do not differ significantly
  from equality
• Stakeholders typically take amounts between fair
  (equal) shares and the whole pie

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Fairness and Self-Deception

• Self-deception has been put forth to explain
  fairness related enigmas (Babcock and Loewenstein
  1997)
• Bargaining impasse (litigation, labor
  negotiations)
• If parties understand fairness, they should be
  able to come to an agreement, even if it is not
  their most favored outcome
• Allocation decisions (voting on taxes, dictator
  experiment)
• How much unfairness is due to unadulterated
  (acknowledged) self-interest and how much because
  of self-deception?
• This study contained first behavioral measure of
  self-deception

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Measure of Self-Deception

• Treatment with Stakeholders where earnings
  differences were not under individual control
• Dictators (A) had higher per letter credits,
  e.g., 75 cents per letter for the Dictator and 25
  cents per letter for the Recipient (B)
• Then unannounced second decision where Dictators
  (A) made an allocation as Spectator between two
  other subjects, C and D, whose per letter credits
  were the same as A and B, respectively

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Predictions and Results

• Predictions
• Dictators (A) should allocate according to their
  beliefs between C and D
• If unfairness is pure acknowledged self-interest,
  A should divide earnings equally between C and D
• If self-deception is at work, A should give C an
  amount close to what A took previously and an
  amount to D that is close to what A gave to B
  previously
• Results
• Almost two-thirds of unfairness is due to
  self-deception
• This is in spite of a very sterile laboratory
  context that is not conducive to self-deception

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Related Research Questions

• Generality Does the Accountability Principle
  exhaust our moral intuition about justice or
  ethics in general?
• Reciprocity Is there a moral bias in
  reciprocity?
• Happiness Are ethical people happier?
• Methodology Can empirical research using
  spectators inform ethics and public policy?
• Robustness Do social preferences differ across
  cultures?
• Risk Is it fair to reward risk-taking or to
  compensate risk-takers for their losses?
• Moral education Can people be taught to think or
  act more ethically?

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Multi-criterion Theory of Justice

• Accountability Principle sometimes conflicts with
  moral intuition should engineers and janitors
  earn the same, even if their only differences are
  innate?
• Distributive justice involves trade-offs between
  three principles (JEBO 2001, JEL 2003)
• Accountability (or Equity), Efficiency and Need
• Accountability is the quintessence of justice it
  is what is distinctive even if it is not always
  most important
• The importance of each principle depends in
  patterned ways on the context, i.e., information
  about the relevant variable(s) and the people
  affected

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Equity and Need

• Dictator allocates 10 in two treatments (Mixed
  Feelings 2008)
• Standard treatment Recipients are fellow
  students
• Charity treatment Recipients are charities

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Reciprocal Altruism

• Distributive justice is about outcomes
• People also care about intentions, i.e., did
  someone intend to hurt (or help) me or was it
  accidental?
• People reciprocate intentions, i.e., are more
  than fair to those who are kind to them and less
  than fair to those who are unkind to them
• Several studies demonstrate that stakeholders
  punish unkindness more vigorously than they
  reward kindness

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Social Preferences and Moral Biases

• Dictator study of distributive and reciprocal
  preferences with stakeholders and spectators
  (Croson and Konow, JEBO in press)
• Stakeholders punish unkindness more than they
  reward kindness for two reasons
• Moral bias they are more inclined to punish and
  less inclined to reward than spectators effect
  of self-interest
• Reciprocal asymmetry even spectators punish more
  than they reward

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Happiness and Morality

• Are more generous people happier and, if so, why?
  
• Dictator study uses psychological measures of
  short-run and long-run happiness (Konow and
  Earley, JPubE 2008)
• More generous people have higher long-run
  happiness
• Generosity does not make people happier in the
  short run, in fact, it sometimes makes them less
  happy
• Money does not buy happiness or produce more
  generous behavior
• Conclusion Acts of generosity are like
  investments that are costly in the short-run but
  produce a return of higher average happiness in
  the long-run

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Impartial Spectator Method

• Spectator method potentially helpful tool for
  empirical investigation of social preferences,
  public policy deliberations and philosophical
  discussions
• Informed by Adam Smiths Theory of Moral
  Sentiments
• Providing relevant information to spectators
  creates consensus, which is valued in empirical
  social science and by leading philosophical
  schools of thought about impartiality
  (forthcoming Social Choice and Welfare)
• Spectator method can reduce stakeholder bias and
  create consensus, which can inform ethics, public
  policy, deliberative democracy and public
  opinion research (Moral High Ground 2008)

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Cross Cultural Evidence on Justice

• Two stage Dictator experiment with production
  replicated in the US and Japan (Konow, Saijo and
  Akai, Morals and Mores 2008)
• Distinction between morals and mores
• Morals are impartial moral preferences, i.e.,
  preferences of spectators
• Mores are moral norms, i.e., distributive
  preferences of stakeholders in personal
  relationships, which includes consideration of
  stakes and of level of anonymity
• Prediction in the context of distributive
  justice, morals correspond to accountability and
  mores cause a shift toward equality

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Conclusions on Morals and Mores

• Patterns that hold for both US and Japanese
  subjects
• Spectators allocate proportionately according to
  accountability
• Having a stake moves allocations toward equality
• Knowing and being known by others shifts
  allocations further toward equality
• US, but not Japanese, stakeholders exhibit a
  significant moral bias
• Interesting not only what is significant, but
  also what is not demographic and cultural
  variables almost never matter
• Values and norms are the same in very different
  countries, although the willingness to act on
  them differs across these two countries

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Fairness and Risk-Taking

• Two stage dictator experiment (Cappelen, Konow,
  Sørensen and Tungodden, 2008)
• Subjects decide between risky or safe
  alternatives, and the risky outcome is randomly
  determined
• Subjects are paired and dictators allocate the
  earnings
• Dictators fall into three distinct and very
  different groups based on whether they consider
  choices and/or luck in making their allocations
• Plurality of fairness views does not bode well
  for social consensus on whether to reward
  risk-taking or compensate losses of unlucky
  risk-takers (Wall Street bailout)

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Does Ethics Training Encourage Morality?

• Three part study (unpublished results)
• Traditional instruction in moral philosophy does
  not systematically affect everyday moral
  judgments
• Targeted morality lectures impact behavior, but
  in specific ways moral reasoning increases
  generosity, whereas enlightened self-interest
  increases cooperation
• Community service increases generosity, although
  this effect appears entirely to current service
  activities
• Ethics instruction, both formal and experiential,
  can increase morality (behavior), but the
  duration of its effects are in doubt, suggesting
  ethics instruction must be ongoing

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Does Ethics Training Encourage Morality?

• Three part study (unpublished results)
• Traditional instruction in moral philosophy does
  not systematically affect everyday moral
  judgments
• Targeted morality lectures impact behavior, but
  in specific ways moral reasoning increases
  generosity, whereas enlightened self-interest
  increases cooperation
• Community service increases generosity, although
  this effect appears entirely to current service
  activities
• Ethics training, both formal and experiential,
  can increase morality (behavior), but the
  duration of its effects are in doubt, suggesting
  ethics instruction must be ongoing

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Current and Future Work Environment

• Theme Environment and Moral Norms
• Incipient work Norms, Green Agents and
  Environmental Policy (Brekke, Konow and Nyborg,
  in progress)
• Questions
• Does the framing of a public goods problem affect
  the interpretation of the appropriate fairness
  norm and, therefore, the level of cooperation?
• Do norms differ between spectators or
  stakeholders?
• Possible future work
• How does the framing of the public goods problem
  affect cooperation in Latin American countries?
• How are these framing effects triggered in the
  field?

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Current and Future WorkProcedural Justice

• Distributive justice concerns outcomes fairness
  in the allocation of social and economic goods
• Procedural justice concerns fairness of the
  processes, rules and procedures by which the
  outcomes are obtained
• The same outcome might be viewed as fair or
  unfair, depending on how it came about
• Example Frey et al. (JPE 1997) find acceptance
  of local siting of nuclear waste repositories
  depends significantly on process

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Experiments on Procedural Justice

• Lottery game (unpublished results)
• Subjects state bids to opt out of a lottery
• Individual decision affects only the
  decision-maker and Matched decision affects
  decision-maker and counterpart
• Contrast between Individual and Matched decisions
  reveals a small preference for fair outcomes
  beyond fair process (fair expected values)

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Experiments on Procedural Justice, continued

• Spite game (unpublished results)
• Multiple round experiment
• Productive task
• High productivity subjects matched with Low
  productivity subjects
• Ultimatum-like game without information about
  productivity discrete choice of equal or
  proportional offers rejection results in unequal
  earnings
• Second ultimatum game with productivity
  information
• Results High productivity Proposers more likely
  to make proportional offers when know, Low
  Proposers more likely to equalize, subjects do
  not prefer more information

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Future Work onProcedural Justice

• Cross-cultural experiments on procedural justice
• Do comparable samples of Latin American subjects
  consider the same procedures fair as North
  American ones?
• Field experiments on procedural justice
• What evidence is there of preferences for
  procedural justice in the field?
• Can one conduct a series of nested experiments
  of procedural justice experiments across the lab
  and field?

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Future Work onProcedural Justice

• Cross-cultural experiments on procedural justice
• Do comparable samples of Latin American and North
  American subjects consider the same procedures
  fair?
• Field experiments on procedural justice
• What evidence is there of preferences for
  procedural justice in the field?
• What evidence might emerge from a series of
  nested experiments of procedural justice
  experiments across the lab and field?

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