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What’s worth knowing in economics?

Global survey of almost 10,000 academic economists shows: Many economists think that economic research should become more policy relevant, multidisciplinary, and disruptive, and pursue more diverse research topics.

Peter Andre

Science and research matter. They shape how we think about ourselves, how we live together, and how we design policies. What researchers work on, which topics they choose, and how they resolve trade-offs between different research objectives is therefore of central societal importance. However, the question about what is “interesting” and “worth knowing” cannot be answered scientifically. Instead, researchers must retreat to their intuition and personal value judgments.

Armin Falk

How do economists think about this “problem of problem choice”? Which fundamental research objectives do they think economists should pursue? Which research topics should they explore? In search for answers, briq researchers Peter Andre and Armin Falk conducted a global survey of almost 10,000 academic economists about their views on what is worth knowing in economics.

For details, download the full study or read the authors’ VoxEU column.

Why do some children lie and others don’t?

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 a new working paper, Johannes Abeler, Armin Falk and Fabian Kosse investigate whether preferences for honesty are malleable and what determines them. Experimentally measuring preferences for honesty in a sample of children, the authors find that children from families with higher socio-economic status (SES) are more honest.

Causal effect of the social environment

The study uses data from the briq family panel, an annual survey of 700 families in the Cologne-Bonn region. To assess the causal effect of the social environment, children from low-SES households were randomly enrolled in a year-long mentoring program. The volunteer mentors spend an afternoon per week with the children and engage in interactive social activities such as cooking, playing football, or doing handicraft activities.

The mentoring program thus enriches the social environment of the children and widens their horizon by providing inputs and experiences that are potentially scarce in low-SES families and, at the same time, essential for the development of honesty preferences.

The researchers find that preferences for honesty are indeed malleable and that they can be changed by such an intervention: About four years after the end of the program, mentored children are significantly more honest. The results thus suggest that early-childhood interventions cannot just improve a child’s achievements but also affect their social and moral behavior.

Self-image plays an important role for moral behavior

Several experimental studies have shown that social image concerns play an important role when people make decisions that may be perceived by others as immoral. A new study by Armin Falk, now published in the Journal of Economic Behavior & Organization, shows that individuals not only care about social image, but also about a positive image vis-à-vis themselves.

To study the causal impact of self-image concerns on moral behavior, Falk exposed subjects to a morally-relevant decision context while randomly varying self-image concerns. Participants in the experiment had the option to earn money by inflicting a painful, yet harmless, electric shock on another participant. A randomly selected group of participants saw their own face on the decision screen in a real-time video feed. To ensure that the behavioral effect can be attributed to self-image rather than the video as such, another group saw themselves in a mirror. Two control groups saw either no video at all or a neutral video.

As the figure shows, those who were confronted with their own image on the screen or in the mirror were significantly less likely to inflict pain on others in return for money. In other words, an exogenous increase in the salience of self-image reduces immoral behavior.

In terms of practical implications, Falk suggests that firms, organizations or tax authorities seeking to promote socially responsible behaviors may want to create environments that draw individuals’ attention to themselves when taking decisions.

briq now certified as a carbon-neutral institute

Behavioral aspects and inequality consequences of climate change are an important part of the briq research agenda. In order to also make our own contribution to limiting global warming, we have reduced our carbon footprint and acquired climate certificates to offset our remaining greenhouse gas emissions from buildings, events, and business travel.

Academic research at an internationally oriented institute like briq strongly relies on the scholarly exchange of thoughts and ideas. Current COVID-19 restrictions aside, regular visits by guest researchers and conference participants from all over the world cause CO2 emissions that cannot be fully avoided.

By implementing a number of targeted measures, including the modernization of our heating and lighting, we have been able to substantially reduce briq’s carbon footprint over the past years. For domestic business trips that cannot be substituted by videoconferencing, the preferred mode of transport is the German railway, whose long-distance trains run on green energy. Employees at briq are incentivized to use public transport for the commute to work and will soon have the option to use job bikes as well. Catering for seminars, workshops, and conferences has been switched to vegetarian meals that can be produced with significantly fewer greenhouse gas emissions than meats.

The remaining CO2 emissions stemming from briq’s business activities, as calculated for the year 2019 and certified by TÜV Rheinland, have been offset through investments in climate protection projects supported by the myclimate foundation. In line with our research focus, we have chosen to invest in projects that also contribute to a reduction of economic and social inequality. These include a project in Kenya enabling women through savings groups to afford an efficient cook stove which reduces the demand for firewood, as well as a project in Myanmar that combines mangrove restoration and women empowerment.

“The COVID-19 pandemic has drawn global attention away from the climate crisis even though climate change will likely pose a far greater threat to humankind. Tackling this huge challenge requires a contribution by everyone, no matter how big or small. By achieving carbon neutrality at briq, we hope to set an example for others to follow suit,” says briq Director Armin Falk.

Associative memory and belief formation

In a recent episode of “Behavioural Science Uncovered”, a podcast with a particular focus on the research process, briq Research Director Florian Zimmermann talks about his paper “Associative Memory and Belief Formation,” co-authored with Benjamin Enke and Frederik Schwerter.

Florian Zimmermann

The paper experimentally investigates the idea that people are more likely to recollect items that are cued by current context. This is because (i) people do not constantly have access to their beliefs so they may need to reconstruct prior information from memory; (ii) similar real-world news are often embedded in similar memorable contexts. The paper finds a predictable and quantitatively meaningful role of associative memory in the formation of beliefs.

To learn more about the paper and the origins of the project, but also about Florian’s experience preparing an ERC starting grant application, and what his typical working day looks like, tune in to the podcast at bsuncovered.com!



briq student fellow portraits: Luca Henkel

The briq scholarship program supports about 25 Ph.D. students at the Bonn Graduate School of Economics. Some of them are directly involved in briq research activities. In a series of short portraits, the briq newsroom introduces our student fellows and what they do. One of them is Luca Henkel, who has been at briq since July 2017.

What is your favorite research area?

I’m generally interested in individual decision-making: how do people make choices under various circumstances and situations, and what drives them? In particular, I’m interested in the determinants of moral decision-making and decision-making under uncertainty. The former concerns situations where individual choices might have consequences for other living creatures, while the latter concerns situations where the consequences of decisions are not known with certainty in advance. What makes it particularly interesting for me is that those situations relate to almost all relevant decisions made by individuals in reality.

What is your approach to these questions?

I’m most excited about combining theoretical insights with experimental evidence. That is, bringing together economic modeling and experimental methods to gain new insights into the process of human decision-making in different contexts.

Can you give an example?

In a joint paper with my advisor Armin Falk, as well as Roland Bénabou and Jean Tirole, we use a model to show that individuals’ answers in morally sensitive choices can generally differ from their preferences or “true” moral types if people have reputational concerns. By reputational concerns we mean the desire of people to see themselves, and be seen by others, as a “good person.” As the mo­del makes clear, such tendencies interact with different methods of asking moral questions, generating interesting predictions on the frequency of moral behavior.

How did you test those predictions?

We conducted an experiment where participants face moral choices that have the following options: one option is to trigger a donation to help patients suffering from tuberculosis. The other is to take money for themselves. In one condition, participants made this choice privately, while in another, their choices were observed by multiple other persons. 

What was the outcome of the experiment?

We indeed find evidence for the predi­ctions by the model. We compare two methods commonly used to infer moral preferences from choices. In one method, participants make multiple choices for different sums of money, and only one is potentially implemented with real consequences. In the other method, participants face a single choice for a fixed monetary amount. Presenting multiple choices leads to more donation decisions compared to a single choice – but only if choices are observed by other persons. If choices are made in private, the opposite is true: then presenting a single choice generates more donations. 

What do these findings tell us?

The results may give guidance for the design of questions and choices when the aim is to maximize moral or prosocial behavior such as donations. At the same time, they provide a caveat for those experiments and contingent-valuation surveys that aim at categorizing people by their “true” moral types.