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Press Releases

Florian Zimmermann wins ERC Starting Grant

briq Research Director Florian Zimmermann has received a Starting Grant from the European Research Council (ERC), which provides funding of roughly 1.3 million euros over five years for his project on “The Role of Memory for Economic Belief Formation.”

The ERC-supported project draws on memory research. It is based on the assumption that when forming opinions and expectations, people frequently consult their memory about relevant prior knowledge and experiences. Belief-based decisions are not only relevant for individual economic outcomes but may also have important effects on the economy as a whole.

The ERC Starting Grants 2020, worth in total €677 million, are meant to help early-career scientists and scholars to build their own teams and conduct pioneering research across all disciplines. The grants are part of the EU’s Research and Innovation programme, Horizon 2020. The success rate for this year’s grant proposals was about 13%.

Florian’s collaborators in this project include briq affiliate Benjamin Enke (Harvard University) and Frederik Schwerter (University of Cologne), with whom he recently co-authored a paper on “Associative Memory and Belief Formation.”

Prosocial spending has delayed negative effects on happiness

Governments around the world increasingly acknowledge the role of happiness as a societal objective and implement policies that target national well-being levels. Knowledge about the determinants of happiness, however, is still limited. A longstanding candidate is prosocial behavior.

Armin Falk (briq) and Thomas Graeber (Harvard)

A new study by Armin Falk and Thomas Graeber, now published in the Proceedings of the National Academy of Sciences, empirically investigates the effect of prosocial behavior on happiness in a high-stakes decision experiment. The findings reveal a more nuanced causal relationship than previously suggested.

Getting money vs. saving a human life

In the experiment, every participant either saved one human life in expectation by triggering a targeted donation of 350 euros, or received an amount of 100 euros. Using a choice paradigm between two binary lotteries with different chances of saving a life, the researchers observed subjects’ intentions at the same time as creating random variation in prosocial outcomes.

The data obtained by measuring happiness repeatedly at various delays weakly replicate the positive effect identified in previous research, but only for the very short run. One month later, the sign of the effect reversed, and prosocial behavior led to significantly lower happiness than obtaining the money. Notably, even those subjects who chose prosocially were ultimately happier if they ended up getting the money for themselves.

The new study thus documents that prosocial behavior does not unequivocally increase happiness, because prosocial spending naturally requires giving up something else, which may decrease happiness in its own right. This may provide an explanation for the apparent absence of universal prosocial behavior.

Gender differences in preferences increase with economic development and gender equality

Higher levels of economic development and gender equality are associated with larger gender differences in economic preferences across countries, according to a new study published in Science. The analysis by Armin Falk (briq and University of Bonn) and Johannes Hermle (University of California, Berkeley) is based on a globally representative dataset on risk and time preferences, positive and negative reciprocity, altruism, and trust.

Previous research has shown that gender differences in these fundamental economic preferences are important in explaining gender differences in economic outcomes, such as for occupational choice, financial investment, or educational decisions, among many others. However, gaps remain in understanding the sources of gender differences in preferences and their variation.

Falk and Hermle contrasted two hypotheses that make opposite predictions. The “social role hypothesis” posits that the attenuation of gender-specific social roles in more developed and gender-egalitarian countries will alleviate differences in preferences between women and men. In contrast, the “resource hypothesis” is based on the notion that greater availability of material and social resources creates the scope for gender-specific ambitions and desires, potentially leading to an expansion of gender differences in more developed and gender-egalitarian countries.

To test these competing hypotheses, the authors used the Global Preferences Survey. Initiated by Armin Falk, this survey contains data on experimentally validated measures of willingness to take risks, patience, altruism, positive and negative reciprocity, and trust for 80,000 individuals in 76 representative country samples. The dataset includes all continents and a broad range of cultures and economic development levels, representing about 90% of both the world population and global income.

The data analysis provides evidence in favor of the resource hypothesis: Gender differences were found to be strongly positively associated with economic development as well as gender equality. These relationships held for each preference separately as well as for a summary index of differences in all preferences jointly (see figure). The findings remained robust in several validation tests, such as accounting for potential culture-specific survey response behavior.

“Our results highlight that a more gender-egalitarian distribution of material and social resources allows women and men to independently express gender-specific preferences,” says Armin Falk. The authors stress, however, that their findings do not rule out an influence of gender-specific roles as cross-culturally universal drivers of gender differences in preferences, nor do they preclude a role for biological or evolutionary determinants.

briq is part of the University Bonn’s new cluster of excellence

Euphoric excitement in Bonn last week: With six “Clusters of Excellence” to receive funding under the Excellence Strategy of the German federal and state governments, the University of Bonn is the most successful university in Germany.

In total, 57 cluster initiatives received funding commitments of up to ten million euros per year for an initial period of seven years. The cluster “ECONtribute: Markets and Public Policy” – a joint initiative of the Universities of Bonn and Cologne, briq, and the MPI Collective Goods – is the only predominantly economics-focused application that made it into the second round of the Excellence Strategy.

The researchers, including briq CEO Armin Falk as one of the principal investigators, aim to analyze the causes and policy implications of market failure. Combining theoretical with behavioral approaches, the cluster will seek answers to important policy-relevant questions such as the following:

  • How do you measure and deal with market power in the digital age when many offers are virtually free of charge but paid for by the provision of data?
  • What are the consequences for consumer protection?
  • How do preferences for fairness or justice influence the design of minimum wages or inheritance taxes?
  • Can (and should) individuals be “nudged” into behavior to their own benefit?

“Our research at briq on the foundations of decision-making, behavioral applications to public and labor economics, the study of discrimination and the malleability of moral behavior perfectly fit the cluster’s research plan. We look forward to contributing our expertise,” said Armin Falk.

Learning about job search

Brochure for job seekers

To investigate how information provision affects job seekers’ employment prospects and labor market outcomes, Steffen Altmann (University of Copenhagen), Armin Falk (briq and University of Bonn), Simon Jäger (MIT) and Florian Zimmermann (briq and University of Bonn) conducted a large-scale field experiment in the German labor market.

Individuals assigned to the treatment group of the experiment received a brochure that informed them about job search strategies and the consequences of unemployment, and motivated them to actively look for new employment.

The authors studied the causal impact of the brochure by comparing labor market outcomes of treated and untreated job seekers in administrative data containing comprehensive information on individuals’ employment status and earnings.

While the treatment yields overall positive effects, these tend to be concentrated among job seekers who are at risk of being unemployed for an extended period of time. Specifically, the treatment effects in the overall sample are moderately positive but mostly insignificant.

At the same time, the researchers do observe pronounced and statistically significant effects for individuals who exhibit an increased risk of long-term unemployment. For this group, the brochure increases employment and earnings in the year after the intervention by roughly 4%.

Given the low cost of the intervention, our findings indicate that targeted information provision can be a highly effective policy tool in the labor market, the authors conclude.

[Read the press release in German]