Are people held responsible for bad choices they make because of detrimental circumstances? How do laypeople’s views of the economy differ from expert opinions? And why does this matter for policymakers?
In this video, briq Postdoc Peter Andre talks about how people make sense of the economic world around them – and how these insights can help address policy challenges, such as the recent surge in inflation.
According to a representative survey for the briq policy monitor, more than two-thirds of the German population would support a halt to energy imports from Russia in order to increase pressure on the Russian government. A broad majority would also welcome additional measures to reduce energy dependence, including alternative energy sources and energy-saving. When it comes to helping the Ukrainian people, many of the respondents would support both aid and integration policies, including permanent residence and work permits for refugees. Germans are divided, however, on the question of further arms deliveries to Ukraine.
Roughly 70 percent of the 2,000 respondents said they would support an embargo on Russian gas, oil and coal. Three out of four Germans are in favor of seizing assets from people close to Putin to mitigate the economic impact of the sanctions on Germany. Around 90 percent are in favor of accelerating the expansion of renewable energies. During the transition phase, three-quarters of Germans would accept an extended operation of Germany’s last remaining nuclear power plants, and 63 percent would accept postponing the coal phase-out.
Most Germans would also support other measures to reduce fuel consumption: 61 percent of respondents would accept a temporary speed limit of 100 km/h on German freeways; 52 percent would be in favor of reintroducing “car-free” Sundays. Four out of five Germans could also imagine extending the working-from-home mandate.
Only half of respondents, however, would agree to deliver more arms to Ukraine. Around 56 percent would be in favor of more political support for Ukraine’s accession to the EU. Seven out of ten Germans would consider granting Ukrainian refugees permanent residence and work permits to facilitate their integration.
Read also: Most Germans would be willing to pay even more for gas and heating
According to a representative survey for the briq policy monitor, two-thirds of the German population would be willing to pay higher prices for gas and heating if this were to increase pressure on the Russian government. Four out of five Germans would lower their room temperature to save energy. And more than half of higher-income households would be willing to spend some of their income to help poorer households cope with higher energy prices.
Based on average fuel prices of about €2.20 per liter, two-thirds of the 2,000 respondents said they would accept higher prices to increase pressure on Russia. Around one-third would even accept a further increase of 30 cents or more. Surprisingly, the willingness to pay is largely independent of individual car use. However, there are clear differences along party lines. While 88 percent of Green Party supporters would accept higher fuel prices, this only applies to around 35 percent of AfD (right-wing party) supporters.
To reduce dependence on oil and gas imports from Russia, two-thirds of those surveyed would also accept a further increase in monthly heating costs. In numbers, around 58 percent of Germans would accept at least 10 euros in additional costs; 31 percent would be willing to pay at least an extra 20 euros per month. Germans’ willingness to pay in order to put pressure on Russia tends to increase with higher income and is more pronounced in western Germany. Household income matters less for people’s willingness to engage in energy-saving behavior. A large majority of respondents said they would be willing to lower their thermostat setting.
Moreover, half or respondents with an annual gross income of more than 50,000 euros would be prepared to contribute part of their income to support households that are more vulnerable to price increases. Almost 30 percent of high-income households would even give up more than two percent of their income to help low-earners. Commenting on the results of the survey, briq director Armin Falk notes: “Solidarity with Ukraine comes at a price – which many Germans seem willing to pay.”
Read also: Broad public support for strategies to reduce German energy dependence on Russia
The working paper “Fighting Climate Change: The Role of Norms, Preferences, and Moral Values” by briq and University of Bonn researchers Peter Andre, Teodora Boneva, Felix Chopra and Armin Falk has received the IRECC Award for “Innovative Research in the Economics of Climate Change” given by the Institute of Labor Economics (IZA) for the two best IZA Discussion Papers published in 2021 on the nature and implications of climate change.
The award-winning research addresses the role of social norms, individual preferences, and moral views in fighting climate change. The key finding of this experimental study: Many people contribute little to climate protection because they underestimate the willingness of others to fight global warming. Providing information on prevalent climate norms raises support for climate-friendly policies, particularly among climate-change skeptics [read more].
The second paper selected for the award, “Temperature, Workplace Safety, and Labor Market Inequality” by Jisung Park, Nora Pankratz and Patrick Behrer, illustrates that rising temperatures increase the risk of work injuries at both outdoor and indoor workplaces. Since low-wage earners are disproportionately affected, this may also exacerbate income inequality. This is a prime example of unexpected secondary effects of climate change that deserve further investigation [read more].
Worth 10,000 euros, the newly established IRECC Award recognizes important new insights into the broader, often underestimated consequences of climate change and the effects of environmental policies on society and the labor market. The inaugural IRECC winners “represent the best of modern applied-economics research,” according to the award committee made up of Susana Ferreira (University of Georgia), Andrew Oswald (University of Warwick, IZA) and Hilmar Schneider (IZA).
Starting in the summer of 2022, Botond Kőszegi will become a full-time professor at briq. He is currently University Professor at Central European University in Budapest, Hungary, after previous positions at the University of California, Berkeley, and a visiting position at the Massachusetts Institute of Technology. Holding a BA in mathematics from Harvard University in 1996, he received his PhD in economics from the MIT in 2000 as one of the first students to write a PhD thesis entirely on behavioral economics.
Having visited many times, I already know briq very well, and have experienced the intense and friendly environment that makes it a center of behavioral-economics research. I look forward to being part of it full time and helping to grow it further!
Over the past two decades he has published extensively on behavioral-economics topics – including several lead articles – in top journals such as the American Economic Review, Quarterly Journal of Economics, Review of Economic Studies, Journal of the European Economic Association, and Journal of Public Economics. He was also Managing Editor at the Review of Economic Studies.
Focusing primarily on the theoretical foundations of behavioral economics, Botond has produced research on self-control problems and the consumption and regulation of harmful products, self-image and anticipatory utility, reference-dependent preferences and loss aversion, markets for deceptive products, and misguided learning.
He has received European Research Council Grants in 2012 and 2018, and the Yrjö Jahnsson Award, a biennial award for the best economist in Europe under the age of 45, in 2015 (see video below).
“I am extremely happy, both academically and personally, that Botond will join us. This will clearly boost our behavioral economics research at briq and Bonn. Absolutely terrific!” said briq director Armin Falk.
Competitiveness is an individual trait that has been shown to be highly predictive of career choices and labor market outcomes and for which a strong gender gap is often found. Gender differences in preferences for competition might therefore provide a partial explanation for gender disparities in career choices, such as differential selection into STEM fields or finance.
A new study by Teodora Boneva, Thomas Buser, Armin Falk and Fabian Kosse provides causal evidence on the impact of socioeconomic background at a young age on preferences for competition and gender differences in these preferences. The analysis is based on the briq family panel, consisting of families living in the German cities of Bonn and Cologne with children born between 2002 and 2004.
To isolate results on the effects of a change to the social environment, around 30 percent of the children in the sample were randomly assigned to a well-established and intensive mentoring program called “Baloo and You”. For a period of about one year, children are provided with a mentor whose brief it is to act as a role model and to enrich the social environment. Volunteer mentors are predominantly university students, and all girls are assigned to a female mentor, thereby exposing girls of low socioeconomic status (SES) to a successful female role model.
Mother’s competitiveness matters for girls
A first finding indicating a potential positive effect of the mentoring program is that the mother’s competitiveness has a positive effect on girls but not on boys. Thus, female role models might be particularly important for shaping girl’s competitiveness.
The broader results confirm earlier findings of significant differences in competitiveness between girls and boys, however the gender gap registered for adolescents with low socioeconomic background stands out. Socioeconomically disadvantaged girls are 4.5 times more likely to be found at the bottom of the competitiveness distribution than boys with comparable SES. On the other hand, girls profiting from a more favorable background (high SES) are “only” twice as likely to show very low competitiveness in comparison to boys with high SES.
The mentoring intervention significantly narrows the gender difference in competitiveness by increasing girls’ willingness to compete especially among those most averse to competition. The gap between the gender differences in competitiveness of the disadvantaged and the advantaged group is closed entirely.
Mentees raise their earnings expectations
A similar pattern emerges for earnings expectations. About six years after the intervention the authors administered a questionnaire in which they elicit the adolescents believe about their earnings at age 30. While the teenagers in this sample have not entered the labor market yet, data shows that there are already large gender gaps regarding expected earnings at this age, especially among the group of low SES adolescents.
Girls with poor socioeconomic background expect 36.7% lower earnings than boys exposed to a similar social environment. The gender gap in the group with high SES is only 8.8%. The intervention reduced the gender gap in the low SES group by 23.3 percentage points to 13.4%, which is statistically indistinguishable from the gender gap in the high SES group.
Taken together, the results suggest that girls with low socioeconomic status are doubly disadvantaged, by both their socioeconomic background and their gender, but that interventions can partially mitigate this disadvantage. The results have important policy implications: Providing adolescents with an enriched social environment may not only result in better outcomes for disadvantaged children but may also lead to a significant reduction in gender inequality.