Discussion Paper No. 515
November 1, 2024
Just Cheap Talk? Investigating Fairness Preferences in Hypothetical Scenarios
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Abstract:
The measurement of preferences often relies on surveys in which individuals evaluate hypothetical scenarios. This paper proposes and validates a novel factorial survey tool to measure fairness preferences. We specifically examine whether a non-incentivized survey captures the same distributional preferences as an impartial spectator design, where choices may apply to a real person. In contrast to prior studies, our design involves high stakes, with respondents determining a real person’s monthly earnings, ranging from $500 to $5,700. We find that the non-incentivized survey module yields nearly identical results compared to the incentivized experiment and recovers fairness preferences that are stable over time. Furthermore, we show that most respondents adopt intermediate fairness positions, with fewer exhibiting strictly egalitarian or libertarian preferences. These findings suggest that high stake incentives do not significantly impact the measurement of fairness preferences and that non-incentivized survey questions covering realistic scenarios offer valuable insights into the nature of these preferences.
Keywords:
Fairness preferences; Survey experiment; Vignette studies;
JEL-Classification:
C90; D63; I39;
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Discussion Paper No. 514
October 31, 2024
Skills and Earnings: A Multidimensional Perspective on Human Capital
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The multitude of tasks performed in the labor market requires skills in many dimensions. Traditionally, human capital has been proxied primarily by educational attainment. However, an expanding body of literature highlights the importance of various skill dimensions for success in the labor market. This paper examines the returns to cognitive, personality, and social skills as three important dimensions of basic skills. Recent advances in text analysis of online job postings and professional networking platforms offer novel methods for assessing a wider range of applied skill dimensions and their labor market relevance. A synthesis and integration of the evidence on the relationship between multidimensional skills and earnings, including the matching of skill supply and demand, will enhance our understanding of the role of human capital in the labor market.
Keywords:
skills; human capital; education; labor market; earnings; tasks; cognitive skills; personality; social skills; multidimensional skills;
JEL-Classification:
J24; I26;
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Discussion Paper No. 513
October 16, 2024
Predictive Power of Biological Sex and Gender Identity on Economic Behavior
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Behavioral differences by biological sex are still not fully understood, suggesting that studying gender differences in behavioral traits through the lenses of continuous identity might be a promising avenue to understand the remaining observed gender gaps. Using a large U.S. online sample (N=2017) and machine learning, we develop and validate a new continuous gender identity measure consisting of separate femininity and masculinity scores. In a first study, we identify ninety attributes from prior research and conduct an experiment to classify them as feminine and masculine. In a subsequent study, a different group of participants completes tasks designed to elicit behavioral traits that have been previously documented in the behavioral economics literature to exhibit binary gender differences. Data for the second study are collected in two waves; the first wave serves as a training sample, allowing us to identify key attributes predicting behavioral traits, create candidate identity measures, and select the most effective one, comprising sixteen attributes, based on predictive power. Finally, we use the second wave (test sample) to validate our gender identity measure, which outperforms existing ones in explaining gender differences in economic decision-making. We show that confidence, competition, and risk are associated with masculinity, while altruism, equality, and efficiency are with femininity, providing new possibilities for targeted policymaking.
Keywords:
Biological sex; Gender identity; Machine learning; Online experiment;
JEL-Classification:
D91; J16; J62; C91;
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Discussion Paper No. 512
October 9, 2024
Employee Performance and Mental Well-Being: The Mitigating Effects of Transformational Leadership During Crisis
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The positive role of transformational leadership for productivity and mental wellbeing has long been established. Transformational leadership behavior may be particularly suited to navigate times of crisis which are characterized by high levels of complexity and uncertainty. We exploit quasi-random assignment of employees to managers and study the role of frontline managers’ leadership styles on employees’ performance, work style, and mental well-being in times of crisis. Using longitudinal administrative data and panel survey data from before and during the Covid-19 pandemic, we find that the benefits of different leadership styles depend on the environment: Employees of more transactional managers outperform those of more transformational leaders before the onset of the pandemic. During the pandemic, however, more transformational managers lead employees to better performance and mental well-being. We discuss potential explanations and implications.
Keywords:
leadership; frontline managers; labor-management relations; organizational behavior; crisis;
JEL-Classification:
M54; M12; J53;
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Discussion Paper No. 511
September 29, 2024
Losing the Country: Debt, Deflation, and the Rural Rise of the Nazi Party
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Using interwar German agriculture as a case, this paper explores the political cost of debt deflation which we characterize with farmers' leverage ratios. Primary deficits drove their increase during 1924-1928, but deflation pushed them to unsustainable levels during 1929-1932. We construct corresponding exogenous county-level exposure measures and show their effect on economic distress as well as political radicalization. Our results suggest that debt deflation increased the Nazi party's rural vote share by over 8 percentage points relative to a counterfactual baseline scenario and was thus a necessary condition for its rural dominance and ascension to parliamentary power.
Keywords:
great depression; weimar germany; nsdap; extremism; debt deflation; economic crisis;
JEL-Classification:
D72; N13; N54;
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Discussion Paper No. 510
September 19, 2024
Motivated Political Reasoning: On the Emergence of Belief-Value Constellations
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We study the relationship between moral values (“ought” statements) and factual beliefs (“is” statements). We show that thinking about values affects the beliefs people hold. This effect is mediated by prior political leanings, thereby contributing to the polarization of factual beliefs. We document these findings in a pre-registered online experiment with a nationally representative sample of over 1,800 individuals in the US. We also show that participants do not distort their beliefs in response to financial incentives to do so, suggesting that deep values exert a stronger motivational force than financial incentives.
Keywords:
motivated beliefs; values; polarization; experiment; reasoning;
JEL-Classification:
C90; D72; D74; D83; P16;
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Discussion Paper No. 509
August 8, 2024
Substitution Patterns and Price Response for Plant-Based Meat Alternatives
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Efforts to promote sustainable resource use through reduced meat consumption face challenges as global meat consumption persists. The resistance may be attributed to the lower sales price of meat compared to most plant-based meat alternatives (PBMAs). Addressing this, our research delves into the pivotal question of which PBMAs resonate most with consumers and how pricing affects demand. In a hypothetical restaurant context, we conducted 2 representative studies among 2,126 individuals in the U.S. to scrutinize preferences for meat, analog, semi-analog, and non-analog burgers. First, in a survey, we assessed rankings of the four burgers, alongside evaluating participants' genuine consideration of these choices to discern a diverse preference distribution. Subsequently, in an experiment, we examined the influence of prices on participants' consideration and choice of PBMAs, thereby capturing both phases of the decision-making process. Our survey shows that meat has considerably higher utility and consumer preference than all PBMAs on average, but we also find substantial heterogeneity (i.e., some consumers prefer PBMAs over meat). In the experiment, we establish that there is a negative association between the consideration of meat and PBMA burgers, though consideration of any one PBMA is positively associated with considering other PBMAs. A noteworthy increase in consideration and choice is observed when prices of PBMAs are reduced, while changing the price of the meat burger only has minimal effect on demand. Such findings underscore the importance of affordability beyond price parity in catalyzing the shift towards plant-based diets.
Keywords:
Plant-based meat; Food decision making; Sustainability; Price elasticity;
JEL-Classification:
M31; L66; Q56; C11; C35;
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Discussion Paper No. 508
July 31, 2024
Measuring Preferences for Algorithms
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We suggest a simple method to elicit individual preferences for algorithms. By altering the monetary incentives for ceding control to the algorithm, the menu-based approach allows for measuring, in particular, the degree of algorithm aversion. Using an experiment, we elicit preferences for algorithms in an environment with measurable performance accuracy under two conditions|the absence and the presence of information about the algorithm's performance. Providing such information raises subjects' willingness to rely on algorithms when ceding control to the algorithm is more costly than trusting their own assessment. However, algorithms are still underutilized.
Keywords:
algorithm aversion; delegation; experiment; preferences;
JEL-Classification:
C91; D83; D91;
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Discussion Paper No. 507
July 15, 2024
Strategic Use of Unfriendly Leadership and Labor Market Competition: An Experimental Analysis
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A significant portion of the workforce experiences what we term `unfriendly leadership,' encompassing various forms of hostile behavior exhibited by managers. The motivations driving managers to adopt such behaviors are insufficiently understood. To explore this phenomenon, we conducted a laboratory experiment examining the relationship between managers' use of unfriendly leadership and labor market competition. We discern two labor market states: excess labor demand, where managers compete to hire workers, and excess labor supply, where workers compete to be hired. By perceiving unfriendly leadership as a performance-contingent punishment device inflicting discomfort on workers, we hypothesize that managers are less inclined to resort to unfriendly leadership when they compete to hire workers. We find that managers tend to engage in unfriendly leadership more frequently and intensely under excess labor supply, in comparison to excess labor demand. This trend is particularly pronounced among male participants. Additionally, workers display a decreased likelihood of accepting employment offers from more unfriendly managers and exert lower levels of effort when working under such managers, indicating that unfriendly leadership is costly.
Keywords:
leadership style; labor market competition; non-monetary incentives;
JEL-Classification:
L20; M14; M55;
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Discussion Paper No. 506
July 8, 2024
Fairness in a Society of Unequal Opportunities
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Modern societies are characterized by widespread disparities in opportunities, which play a crucial role in creating income inequality. This paper investigates how individuals handle income inequality arising from these unequal opportunities. We report from a large-scale experimental study involving general populations in the United States and Scandinavia, where participants make consequential redistributive decisions as third-party ‘spectators’ for workers who faced unequal opportunities. Our findings provide strong evidence that a significant majority of people are willing to accept inequality caused by unequal opportunities, a position that markedly contrasts with their responses to inequality caused by luck. Two distinct forces drive greater acceptance of inequality under unequal opportunities: the tendency to mistakenly attribute the impact of unequal opportunities to inherent productivity, and the moral relevance attributed to choice differences caused by unequal opportunities. We further demonstrate a clear societal and political divide in responses to unequal opportunities, with Americans and right-wing voters exhibiting a greater acceptance of the resulting inequality, reflecting both differences in fairness views and attribution biases in these populations.
Keywords:
unequal opportunities; inequality acceptance; attribution bias; fairness views;
JEL-Classification: