Alberto Bisin

The economics of cultural transmission and the dynamics of preferences

This paper studies the population dynamics of preference traits in a model of intergenerational cultural transmission. Parents socialize and transmit their preferences to their offspring, motivated by a form of paternalistic altruism (“imperfect empathy”). In such a setting we study the long run stationary state pattern of preferences in the population, according to various socialization mechanisms and institutions, and identify sufficient conditions for the global stability of an heterogenous stationary distribution of the preference traits. We show that cultural transmission mechanisms have very different implications than evolutionary selection mechanisms with respect to the dynamics of the distribution of the traits in the population, and we study mechanisms which interact evolutionary selection and cultural transmission. Journal of Economic Literature Classification numbers: D10, I20, J13.

“Beyond the Melting Pot”: Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits

This paper presents an economic analysis of the intergenerational transmission of ethnic and religious traits through family socialization and marital segregation decisions. Frequency of intragroup marriage (homogamy), as well as socialization rates of religious and ethnic groups, depend on the groups share of the population: minority groups search more intensely for homogamous mates, and spend more resources to socialize their offspring. This pattern generally induces a dynamics of the distribution of ethnic and religious traits which converges to a culturally heterogeneous stationary population. Existing empirical evidence bearing directly and indirectly on the implications of the model is discussed.

Religious Intermarriage and Socialization in the United States

This paper presents an empirical analysis of a choice‐theoretic model of cultural transmission. In particular, we use data from the General Social Survey to estimate the structural parameters of a model of marriage and child socialization along religious lines in the United States. The observed intermarriage and socialization rates are consistent with Protestants, Catholics, and Jews having a strong preference for children who identify with their own religious beliefs and making costly decisions to influence their children’s religious beliefs. Our estimates imply dynamics of the shares of religious traits in the population that are in sharp contrast with the predictions obtained by linear extrapolations from current intermarriage rates.

The Economics of Cultural Transmission and Socialization

Cultural transmission arguably plays an important role in the determination of many fundamental preference traits (e.g., discounting, risk aversion and altruism) and most cultural traits, social norms, and ideological tenets ( e.g., attitudes towards family and fertility practices, and attitudes in the job market). It is, however, the pervasive evidence of the resilience of ethnic and religious traits across generations that motivates a large fraction of the theoretical and empirical literature on cultural transmission. This article reviews the main contributions of models of cultural transmission, from theoretical and empirical perspectives. It presents their implications regarding the long-run population dynamics of cultural traits and cultural heterogeneity, the worlds geographical fragmentation by ethic and religious traits, at any given time. Finally, the paper reviews the empirical literature which estimates various properties of cultural transmission mechanisms as well as the population dynamics of specific traits.

Present-Bias, Quasi-Hyperbolic Discounting, and Fixed Costs

In this paper we elicit preferences for money-time pairs via experimental techniques. We estimate a general specification of discounting that nests exponential and hyperbolic discounting, as well as various forms of present bias, including quasi-hyperbolic discounting. We find that discount rates are high and decline with both delay and amount, as most of the previous literature. We also find clear evidence for present bias. When identifying the form of the present bias, little evidence for quasi-hyperbolic discounting is found. The data strongly favor instead a specification with a small present bias in the form of a fixed cost, of the order of

Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-saving decisions

4 on average across subjects. With such a fixed cost the curvature of discounting is imprecisely estimated and both exponential and hyperbolic discounting cannot be rejected for several subjects.

The Distribution of Wealth and Fiscal Policy in Economies with Finitely Lived Agents

We provide a new model of consumption-saving decisions which explicitly allows for internal commitment mechanisms and self-control. Agents have the ability to invoke either automatic processes that are susceptible to the temptation of ‘overconsuming,’ or alternative control processes which require internal commitment but are immune to such temptations. Standard models in behavioral economics ignore such internal commitment mechanisms. We justify our model by showing that much of its construction is consistent with dynamic choice and cognitive control as they are understood in cognitive neuroscience. The dynamic consumption-saving behavior of an agent in the model is characterized by a simple consumption-saving goal, a propensity to consume out of wealth which is independent of any realized temptation, and a cut-o rule for invoking control processes to inhibit automatic processes and implement the consumptionsaving goal. We compare the behavior induced by our model with that induced by standard behavioral models where agents have no internal commitment ability. We discuss empirical tests of our model with available individual consumption data and we suggest critical tests with brain-imaging and experimental data.

Efficient Competitive Equilibria with Adverse Selection

We study the dynamics of the distribution of wealth in an overlapping generation economy with finitely lived agents and intergenerational transmission of wealth. Financial markets are incomplete, exposing agents to both labor and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study analytically the dependence of the distribution of wealth—of wealth inequality in particular—on various fiscal policy instruments like capital income taxes and estate taxes, and on different degrees of social mobility. We show that capital income and estate taxes can significantly reduce wealth inequality, as do institutions favoring social mobility. Finally, we calibrate the economy to match the Lorenz curve of the wealth distribution of the U.S. economy.

A Model of Cultural Transmission, Voting and Political Ideology

Do Walrasian markets function orderly in the presence of adverse selection? In particular, is their outcome efficient when exclusive contracts are enforceable? This paper addresses these questions in the context of a Rothschild‐Stiglitz insurance economy. We identify an externality associated with the presence of adverse selection as a special form of consumption externality. Consequently, we show that competitive equilibria always exist but are not typically incentive efficient. However, as markets for pollution rights can internalize environmental externalities, markets for consumption rights can be designed to internalize the consumption externality due to adverse selection. With such markets competitive equilibria exist and incentive‐constrained versions of the first and second welfare theorems hold.

Rational expectations equilibria of economies with local interactions

In this paper, we present a model of cultural transmission of preferences on goods, some of which are provided publicly through simple majority voting. We emphasize the existence of a two-way causality between socialization decisions and political outcomes. This generates the possibility of indeterminacies and multiple self-fulfilling equilibrium paths in cultural change and politics. We provide then a rationale for ideologies and collective socialization institutions as coordination mechanisms allowing cultural groups to preserve or shift political power in favor of their preference profile in the long run.