Social preferences affect virtually any aspect of economic behavior, with massive macroeconomic outcomes. However, they are arduous to measure and it is difficult to ascertain whether they are inherited from ancestors or if they result from a life long learning process. This project aims at shedding light on the roots and the outcomes of two of the most economically relevant preferences, regarding prosocial attitudes and support for redistribution.
1) As previous studies suggest that the evolution of social preferences is a path dependent process that develops over centuries, we search for exogenous sources of variation rooted in the deep past. This is done by exploiting the unique historical experiment offered by the exodus of the Huguenots in the XVIIth century from France to Britain.
2) We then test the assumption that social preferences continuously change as a result of a life long learning process by exploring the role of natural disasters, which exogenously shock the benefits of cooperation and redistribution. We, then, assess how fast Internet is changing social preferences by exploiting exogenous discontinuities in broadband penetration in the UK.
4) To test the reactiveness of social preferences to exogenous stimuli, we assess how they respond to manipulated shocks in a laboratory experiment using a time pressure treatment. This part of the project deals with the role of fast and intuitive vs. slow and deliberative thinking in driving prosocial behaviour.
5) As public investments in R&D also reveal a shared concern for the welfare of future generations, which are generally associated to time preferences, we explore the impact of a public policy programme enacted in Italy at the end of 2012 for supporting young innovative R&D oriented firms. As international trade has been found to react to cooperative attitudes and trust between pairs of nations, we empirically explore the determinants of the sensitivity of exports.
Despite the huge attention devoted to social preferences in the economics debate, we still have a limited knowledge of their roots and on how to nudge them. This project will innovate the literature in several substantial ways.
1) The exodus of the French Huguenots between the 16th and 17th century constitutes a historical natural experiment that was never exploited in the economics literature. This part of the project will involve a significant work of data collection. The effort will consist in drawing down the Huguenot Wills and Administrations of the Huguenot Society and save them in a digitalized and usable format. This will provide a newly assembled dataset to be merged with other economic and social variables useful for the empirical analysis provided by the Great Britain Historical Database and by the UK Censuses of the 17th and 18th centuries.
2) This project will be the first to use data from a national Strong Motion Network to assess the impact of earthquakes on social preferences. We will add to the literature on the roots of social preferences by exploiting a series of natural experiments (the earthquakes occurred in Italy over the last 30 years) to assess how prosocial attitudes and redistributive preferences react to unfortunate exogenous events. While there are a few studies analysing the correlation between the exposure to natural disasters and cooperative attitudes (Calo-Blanco et al., 2017), the impact of disasters of redistributive preferences has never been studied before.
In addition, our analysis of the impact of broadband penetration in the UK will add to the literature on the roots of social preferences by investigating how progress in ICT can induce a rapid change in social preferences and assessing the extent to which such change is persistent over time.
3) Our work on the deliberative and intuitive sources of prosocial behaviour digs into a largely innovative literature that links economics with cognitive and social psychology. We intend to contribute by collecting new experimental data by means of fully incentivized lab experiments on a large number of individuals. We will also exploits innovative methods to infer the working of intuition versus deliberation in decision-making. These include: time constraint, where subjects under time pressure or time delay are more likely to rely on intuition or reasoning; priming, where subjects are stimulated to rely on a cognitive process by letting them remember situations in which such a cognitive process has yielded goods results (or the other cognitive process has yielded bad results); ego depletion, where subjects who are assigned a cognitive load are more prone to the use of intuition.
4) The empirical literature on public funded incentives for innovation has mostly focused on estimating elasticities of R&D investments to R&D taxes, finding mixed results in the short run. As pointed out by Thomson (2015), firm level evidence is likely to be biased by endogeneity issues. This project will add to the literature by providing a comprehensive counterfactual evaluation of a new policy introduced in Italy to incentivize young innovative start-up firms. More specifically, we will exploit exogenous variation in eligibility in a Regression Discontinuity Design, RDD, context to estimate the causal effects of the intervention on some key variables such as: firms¿ share of intangible assets, turnover, number of employees and number of partners.
5) Finally, we will add to the literature on the outcomes of social preferences by assessing how social preferences and access to finance compete in determining the sensitivity of exports.
References
Algan, Y., Cahuc, P. (2010). Inherited Trust and Growth. American Economic Review 100(5): 2060-92.
Calo-Blanco, A., Kovariz, J., Mengel, F., Romero, J. G. (2017). Natural disasters and indicators of social cohesion. PLoS ONE 12(6): e0176885.
Hanaoka, C., Shigeoka, H., and Watanabe, Y. (2018). Do risk preferences change? evidence from the Great East Japan earthquake. American Economic Journal: Applied, 10(2):298¿330.
Nunn, N., Wantchekon, L. (2011). The slave trade and the origins of mistrust in Africa. American Economic Review 101(7): 3221-52.
Thomson R., 2015. The effectiveness of R&D tax credits. Review of Economics and Statistics, 99 (3): 544-549.