A07
Obstacles to Convergence in Regional Development: Behavioral Explanations
Discussion Papers

Discussion Paper No. 428
September 19, 2023

Recession Experiences During Early Adulthood Shape Prosocial Attitudes Later in Life

Author:

Jan Bietenbeck (Lund University)
Uwe Sunde (LMU München)
Petra Thiemann (Lund University)

Abstract:

This paper explores whether the experience of a severe recession during early adulthood shapes individuals’ prosocial attitudes. The analysis uses survey responses to experimentally validated questions that measure prosocial attitudes for approximately 65,000 respondents in 75 countries. The identification approach exploits variation in recession experiences across 78 different birth cohorts. We find that exposure to a recession during early adulthood is associated with lower levels of prosociality later in life. The effect only emerges for experiences during impressionable years (age 18-25), mainly affects prosocial attitudes among men, and is orthogonal to the effect of experiences with democracy.

Keywords:

prosocial attitudes; impressionable years; experience effects; cohort effects;

JEL-Classification:

D91; E30; E71;

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Discussion Paper No. 342
November 30, 2022

The Effect of Preferential Admissions on the College Participation of Disadvantaged Students: The Role of Pre-College Choices

Author:

Michela M. Tincani (UCL, CEPR)
Fabian Kosse (University of Würzburg, briq)
Enrico Miglino (UCL)

Abstract:

Exploiting the randomized expansion of preferential college admissions in Chile, we show they increased admission and enrollment of disadvantaged students by 32%. But the intended beneficiaries were nearly three times as many, and of higher average ability, than those induced to be admitted. The evidence points to students making pre-college choices that caused this divergence. Using linked survey-administrative data, we present evidence consistent with students being averse to preferential enrollment, misperceiving their abilities, and having social preferences towards their friends (although social preferences did not mediate the admission impacts). Simulations from an estimated structural model suggest that aversion to the preferential channel more than halved the enrollment impacts, by inducing some to forgo preferential admission eligibility, and that students' misperceptions worsened the ability-composition of college entrants, by distorting pre-college investments into admission qualifications. The results demonstrate the importance of understanding high school students' preferences and beliefs when designing preferential admissions.

Keywords:

preferential college admissions; experimental policy evaluation; subjective beliefs; dynamic choice model;

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Discussion Paper No. 339

The Empirics of Economic Growth Over Time and Across Nations: A Unified Growth Perspective

Author:

Matteo Cervellati (University of Bologna)
Gerrit Meyerheim (LMU Munich)
Uwe Sunde (LMU Munich)

Abstract:

This research develops an expanded unified growth theory that incorporates the endogenous accumulation of physical capital, population, human capital, and technology. The model incorporates a complementarity between physical capital and human capital and can be extended to a multi-country setting with international technology diffusion. The analytical characterization of the mechanisms behind the observed patterns of long-run growth and comparative development delivers a consistent explanation for a large set of seemingly unrelated empirical facts. A quantitative multi-country version of the model matches various empirical regularities of long-run growth dynamics and comparative development patterns that have previously been studied in isolation. The findings also shed new light on the role of the demographic transition for convergence patterns, the specification of cross-country growth regressions, technology spillovers, and the secular stagnation debate.

Keywords:

unified growth; long-run development; demographic transition; secular stagnation;

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Discussion Paper No. 338

Does Demography Determine Democratic Attitudes?

Author:

Rainer Kotschy (Harvard University)
Uwe Sunde (LMU Munich)

Abstract:

This paper presents new evidence on how demography affects democratic attitudes in Western democracies. Using individual survey responses, the empirical analysis disentangles age from cohort patterns and other contemporaneous economic and political influences that shape democratic attitudes. The results reveal that support for democracy increases with age and is lower for more recent birth cohorts. These patterns are more pronounced in Western democracies than in the former Eastern bloc and in other countries around the world. Additional findings document that demography's effect partly captures heterogeneity in experiences with democracy, and that socioeconomic factors impact democratic attitudes.

Keywords:

support for democracy; age-periods-cohort models; population aging; demographic composition; stability of democracy; modernization hypothesis;

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Discussion Paper No. 317
February 18, 2022

Speed, Quality, and the Optimal Timing of Complex Decisions: Field Evidence

Author:

Uwe Sunde (LMU Munich)
Anthony Strittmatter (CREST-ENSAE)
Dainis Zegners (Rotterdam School of Management)

Abstract:

This paper presents an empirical investigation of the relation between decision speed and decision quality for a real-world setting of cognitively-demanding decisions in which the timing of decisions is endogenous: professional chess. Move-by-move data provide exceptionally detailed and precise information about decision times and decision quality, based on a comparison of actual decisions to a computational benchmark of best moves constructed using the artificial intelligence of a chess engine. The results reveal that faster decisions are associated with better performance. The findings are consistent with the predictions of procedural decision models like drift-diffusion-models in which decision makers sequentially acquire information about decision alternatives with uncertain valuations.

Keywords:

response times; speed-performance profile; drift-diffusion model; uncertain evaluations;

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Discussion Paper No. 296
November 15, 2021

Malleability of Preferences for Honesty

Author:

Fabian Kosse (LMU Munich, briq)
Johannes Abeler (University of Oxford, IZA, CESifo)
Armin Falk (briq, University of Bonn)

Abstract:

Reporting private information is a key part of economic decision making. A recent literature has found that many people have a preference for honest reporting, contrary to usual economic assumptions. In this paper, we investigate whether preferences for honesty are malleable and what determines them. We experimentally measure preferences for honesty in a sample of children. As our main result, we provide causal evidence on the effect of the social environment by randomly enrolling children in a year-long mentoring programme. We find that, about four years after the end of the programme, mentored children are significantly more honest.

Keywords:

honesty; lying; truth-telling; formation of preferences; experiments with children;

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Discussion Paper No. 295

The Origins of Gender Differences in Competitiveness and Earnings Expectations: Causal Evidence from a Mentoring Intervention

Author:

Fabian Kosse (LMU Munich, briq)
Teodora Boneva (University of Bonn)
Thomas Buser (University of Amsterdam, Tinbergen Institute)
Armin Falk (briq, University of Bonn)

Abstract:

We present evidence on the role of the social environment for the development of gender differences in competitiveness and earnings expectations. First, we document that the gender gap in competitiveness and earnings expectations is more pronounced among adolescents with low socioeconomic status (SES). We further document that there is a positive association between the competitiveness of mothers and their daughters, but not between the competitiveness of mothers and their sons. Second, we show that a randomized mentoring intervention that exposes low-SES children to predominantly female role models causally affects girls' willingness to compete and narrows both the gender gap in competitiveness as well as the gender gap in earnings expectations. Together, the results highlight the importance of the social environment in shaping willingness to compete and earnings expectations at a young age.

Keywords:

competitiveness; gender; socioeconomic status; inequality; earnings expectations;

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Discussion Paper No. 293
November 11, 2021

Malaria and Chinese Economic Activities in Africa

Author:

Uwe Sunde (LMU Munich, CEPR, IZA)
Matteo Cervellati (University of Bologna, CEPR, IZA)
Elena Esposito (HEC, University of Lausanne)
Song Yuan (University of Warwick)

Abstract:

We present novel evidence for the influence of malaria exposure on the geographic loca- tion of Chinese economic activities in Africa. The hypothesis is based on the observation that many Chinese aid projects and infrastructure contractors rely on Chinese personnel. High malaria exposure might constitute an important impediment to their employment and productivity. Combining data on Chinese aid and construction projects with geo-localized information about the presence of individuals from internet posts reveals a lower density of Chinese activities and of Chinese workers in areas with a high malaria exposure. This e↵ect is mitigated partly through heterogeneity across sectors and immunity of the local population, through the selection of Chinese workers from regions in China with historically high malaria risk, and through the availability of malaria treatment.

Keywords:

infrastructure projects; malaria; disease prevalence; immunity; weibo;

JEL-Classification:

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Discussion Paper No. 292

Patience and Comparative Development

Author:

Uwe Sunde (LMU Munich)
Thomas Dohmen (University of Bonn)
Benjamin Enke (Harvard University)
Armin Falk (briq, University of Bonn)
David Huffmann (University of Pittsburgh)
Meyerheim Gerrit (LMU Munich)

Abstract:

This paper studies the relationship between patience and comparative develop- ment through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with per capita income and the accumulation of physical capital, human capital and productivity. These correlations hold across countries, subnational regions, and individuals. Second, the magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyze an OLG model in which savings and education decisions are endogenous to patience, aggregate production is characterized by capital-skill complementarities, and productivity implicitly depends on patience through a human capital externality. In our model estimations, general equilibrium effects alone account for a non-trivial share of the observed amplification effects, and an extension to human capital externalities can quantitatively match the empirical evidence.

Keywords:

time preference; comparative development; factor accumulation;

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Discussion Paper No. 263
November 10, 2021

Decisions and Performance Under Bounded Rationality: A Computational Benchmarking Approach

Author:

Uwe Sunde (LMU Munich)
Dainis Zegners (Erasmus University Rotterdam)
Anthony Strittmatter (CREST-ENSAE)

Abstract:

This paper presents a novel approach to analyze human decision-making that involves comparing the behavior of professional chess players relative to a computational benchmark of cognitively bounded rationality. This benchmark is constructed using algorithms of modern chess engines and allows investigating behavior at the level of individual move-by-move observations, thus representing a natural benchmark for computationally bounded optimization. The analysis delivers novel insights by isolating deviations from this benchmark of bounded rationality as well as their causes and consequences for performance. The findings document the existence of several distinct dimensions of behavioral deviations, which are related to asymmetric positional evaluation in terms of losses and gains, time pressure, fatigue, and complexity. The results also document that deviations from the benchmark do not necessarily entail worse performance. Faster decisions are associated with more frequent deviations from the benchmark, yet they are also associated with better performance. The findings are consistent with an important influence of intuition and experience, thereby shedding new light on the recent debate about computational rationality in cognitive processes.

Keywords:

cognitively bounded rationality; benchmark computing; artificial intelligence; decision quality; decision time;

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