Erik Ø. Sørensen

Fairness and the Development of Inequality Acceptance

Fairness or Equality? Inequality in payments may be seen as inherently unfair, or as appropriate when it reflects differential achievement. Using an economic exchange game, Almås et al. (p. 1176) mapped how judgments changed from 5th-grade students to 13th graders: Fifth graders expressed a preference for equal division of rewards, whereas the 13th graders tolerated unequal outcomes, as long as they had been provided with evidence of unequal inputs. That is, the younger children were strict egalitarians, but the older ones—perhaps as a consequence of exposure to a variety of achievement-based social activities, such as sports—tended toward meritocracy. As children progress to adolescence, their sense of fairness changes from pure equality to proportionality based on merit. Fairness considerations fundamentally affect human behavior, but our understanding of the nature and development of people’s fairness preferences is limited. The dictator game has been the standard experimental design for studying fairness preferences, but it only captures a situation where there is broad agreement that fairness requires equality. In real life, people often disagree on what is fair because they disagree on whether individual achievements, luck, and efficiency considerations of what maximizes total benefits can justify inequalities. We modified the dictator game to capture these features and studied how inequality acceptance develops in adolescence. We found that as children enter adolescence, they increasingly view inequalities reflecting differences in individual achievements, but not luck, as fair, whereas efficiency considerations mainly play a role in late adolescence.

Willingness to Compete: Family Matters

This paper studies the role of family background in explaining differences in the willingness to compete. By combining data from a lab experiment conducted with a representative sample of adolescents in Norway and high quality register data on family background, we show that family background is fundamental in two important ways. First, boys from low socioeconomic status families are less willing to compete than boys from better off families, even when controlling for confidence, performance, risk preferences, time preferences, social preferences, and psychological traits. Second, family background is crucial for understanding the large gender difference in the willingness to compete. Girls are much less willing to compete than boys among children from better off families, whereas we do not find any gender difference in willingness to compete among children from low socioeconomic status families. Our data suggest that the main mechanism explaining the role of family background is that the father’s socioeconomic status has a large effect on the boys’ willingness to compete, but no effect on the girls. We do not find any effect on the willingness to compete for boys or girls of the mother’s socioeconomic status or other family characteristic that may potentially shape competition preferences, including parental equality and sibling rivalry.

The Neighbourhood is Not What it Used to be

Parents influence their children’s adult outcomes through economic and genetic endowments, transmission of cultural values and social skills, and through choice of residential location. Using a variance decomposition framework which provides bounds on the effect of families and neighbourhoods, we find important effects of family characteristics as well as residential location on educational attainment and adult earnings in Norway. Families are more important than neighbourhoods as the correlations among siblings are significantly higher than among children growing up in the same local community. Sibling correlations are estimated to be a little lower than for the US, while correlations between neighbourhood children in Norway are found to be significantly weaker than in the US. Unlike previous studies, we also assess changes over time by studying children growing up around 1960 and 1970. While family effects are permanent over time, the impact of neighbourhoods is reduced by half in size from 1960 to 1970 and we link this result to several policy changes in the 1960s aimed at increasing equality of opportunity in Norway. Our results differ from previous US studies, suggesting that the role of families and neighbourhoods in explaining the degree of equality of opportunity and social mobility depends on labour market institutions and redistributive policies.

Social Preferences in the Lab: A Comparison of Students and a Representative Population†

We report from a lab experiment conducted with a sample of participants that is nationally representative for the adult population in Norway and two student samples (economics students and non-economics students). The participants make choices both in a dictator game (a non-strategic environment) and in a generalized trust game (a strategic environment). We find that the representative sample differs fundamentally from the student samples, both in the relative importance assigned to different moral motives (efficiency, equity, and reciprocity) and in the level of selfish behavior. It is also interesting to note that the gender effects observed in the student samples do not correspond to the gender effects observed in representative sample. Finally, whereas economics students behave less pro-socially than non-economics students, the two student groups are similar in the relative importance they assign to different moral motives.

Luck, Choice and Responsibility

We conduct a laboratory experiment where third-party spectators can redistribute resources between two agents, thereby offsetting the consequences of controllable and uncontrollable luck. Some spectators go to the limits and equalize all or no inequalities, but many follow an interior allocation rule previously unaccounted for by the fairness views in the literature. These interior allocators regard an agent’s choice as more important than the cause of her low income and do not always compensate bad uncontrollable luck. Instead, they condition such compensation on the agent’s decision regarding controllable luck exposure, even though the two types of luck are independent.

Immoral Criminals? An Experimental Study of Social Preferences Among Prisoners

This paper studies the pro-social preferences of criminals by comparing the behavior of a group of prisoners in a lab experiment with the behavior of a benchmark group recruited from the general population. We find a striking similarity in the importance the two groups attach to pro-social preferences in both in strategic and non-strategic situations. This result also holds when the two groups interact. Data from a large internet experiment,matched with official criminal records, suggest that our main finding from the lab experiment is not influenced by the additional scrutiny experienced by participants in prison.

Teaching through television: Experimental evidence on entrepreneurship education in Tanzania

Can television be used to teach and foster entrepreneurship among youth in developing countries? We report from a randomized control field experiment of an edutainment show on entrepreneurship broadcasted over almost three months on national television in Tanzania. The field experiment involved more than two thousand secondary school students, where the treatment group was incentivized to watch the edutainment show. We find short-term evidence of the edutainment show inspiring the viewers to become more interested in entrepreneurship and business and shaping non-cognitive traits such as risk- and time preferences, and long-term evidence of more business startups; in general, the treatment effects are more pronounced for the female viewers. However, we also find evidence that the encouragement of entrepreneurship discouraged investment in schooling;administrative data show a negative treatment effect on school performance and long-term survey data show that fewer treated students continue schooling.

Face-Saving or Fair-Minded: What Motivates Moral Behavior?

We study the relative importance of intrinsic moral motivation and extrinsic social motivation in explaining moral behavior. The key feature of our experiment is that we introduce a dictator game design that manipulates these two sources of motivation. In one set of treatments, we manipulate the moral argument for sharing, in another we manipulate the information given to the recipient about the context of the experiment and the dictators decision. The paper offers two main findings. First, we provide evidence of intrinsic moral motivation being of fundamental importance. Second, we show that extrinsic social motivation matters and is crowding-in with intrinsic moral motivation. We also show that intrinsic moral motivation is strongly associated with self-reported charitable giving outside the lab and with political preferences.

Global Income Inequality and Cost-of-Living Adjustment: The Geary-Allen World Accounts

Standard ways of measuring real income are known to be inconsistent with consumer preferences. We provide preference-consistent estimates of real income, based on the income-specific price indices that are consistent with nonhomothetic preferences. We find that existing measures, such as Geary, GEKS and GAIA, create systematic biases: the poorer is a country, the more its income is overestimated by these measures. Consequently, international income inequality is underestimated by the same measures.

Efficiency, equality and reciprocity in social preferences: A comparison of students and a representative population

The debate between Engelmann and Strobel (2004, 2006) and Fehr, Naef, and Schmidt (2006) highlights the important question of the extent to which lab experiments on student populations can serve to identify the motivational forces present in society at large. We address this question by comparing the lab behavior of a student group and a non-student group, where the non-student group on all observable factors is almost identical to the representative adult population in Norway. All participants take part in exactly the same lab experiment. Our study shows that students may not be informative of the role of social preferences in the broader population. We nd that the representative participants differ fundamentally from students both in their level of selfishness and in the relative importance assigned to different moral motives. It is also interesting to note that while we do not find any substantial gender differences among the students, males and females in the representative group differ fundamentally in their moral motivation.