Using Behavioral Insights For a Better Understanding of Economic Decisions (Regarding Savings, Inequality and Dishonesty)

This dissertation consists of three essays on behavioral economics, with a general aim of enriching our understanding of economic decisions using behavioral insights and experimental methodology. Each essay takes on one particular topic with this general aim.

The first chapter studies savings behavior of the poor. In this project, partnering with a savings product provider in Kenya, we tested the extent to which behavioral interventions and financial incentives can increase the saving rate of individuals with low and irregular income. Our experiment lasted for six months and included a total of twelve conditions. The control condition received weekly reminders and balance reporting via text messages. The treatment conditions received in addition one of the following interventions: (1) reminder text messages framed as if they came from the participant’s kid (2) a golden colored coin with numbers for each week of the trial, on which participants were asked to keep track of their weekly deposits (3) a match of weekly savings: The match was either 10% or 20% up to a certain amount per week. The match was either deposited at the end of each week or the highest possible match was deposited at the start of each week and was adjusted at the end. Among these interventions, by far the most effective was the coin: Those in the coin condition saved on average the highest amount and more than twice as those in the control condition. We hypothesize that being a tangible track-keeping object; the coin made subjects remember to save more often. Our results support the line of literature suggesting that saving decisions involve psychological aspects and that policy makers and product designers should take these influences into account.

The second chapter is related to views towards inequality. In this project, we investigate how the perceived fairness of income distributions depends on the beliefs about the process that generated the inequality. Specifically, we examine how two crucial features of this process affect fairness views: (1) Procedural justice - equal treatment of all, (2) Agency - one's ability to determine his/her income. We do this in a lab experiment by varying the equality of opportunity (procedural justice), and one's ability to make choices, which consequently influence subjects’ ability to influence their income (agency). We then elicit ex-post redistribution decisions of the earnings as a function of these two elements. Our results suggest both agency and procedural justice matter for fairness. Our main findings can be summarized as follows: (1) Highlighting the importance of agency, we find that inequality resulting from risk is considered to be fair only when risk is chosen freely; (2) Highlighting the importance of procedural justice, we find that introducing inequality of opportunity significantly increases redistribution, however the share of subjects redistributing none remain close to the share of subjects redistributing fully revealing an underlying heterogeneity in the population about how fairness views should account for inequality of opportunity.

The third chapter is on morality. In this project, we study whether religious rituals act as an internal reminder for basic moral principles and thus affect moral judgments. To this end, we conducted two survey experiments in Turkey and Israel to specifically test the effect of Ramadan and Yom Kippur. The results from the Turkish sample how that Ramadan has a significant effect on moral judgments to some extent for those who report to believe in God. Those who believe in God judged the moral acceptability of ten out of sixty one actions significantly differently in Ramadan, whereas those who reported not to believe in God significantly changed their judgments only for one action in Ramadan. Our results extends the hypothesis established by lab experiments that religious reminders have a significant effect on morality, by testing it in the field in the natural environment of religious rituals.

This thesis is part of a broader collaborative research agenda with both colleagues and advisors. The programming, analyses, and writing, as well as any errors in this work, are my own.

Two Distinct Moral Mechanisms for Ascribing and Denying Intentionality.

Philosophers and legal scholars have long theorized about how intentionality serves as a critical input for morality and culpability, but the emerging field of experimental philosophy has revealed a puzzling asymmetry. People judge actions leading to negative consequences as being more intentional than those leading to positive ones. The implications of this asymmetry remain unclear because there is no consensus regarding the underlying mechanism. Based on converging behavioral and neural evidence, we demonstrate that there is no single underlying mechanism. Instead, two distinct mechanisms together generate the asymmetry. Emotion drives ascriptions of intentionality for negative consequences, while the consideration of statistical norms leads to the denial of intentionality for positive consequences. We employ this novel two-mechanism model to illustrate that morality can paradoxically shape judgments of intentionality. This is consequential for mens rea in legal practice and arguments in moral philosophy pertaining to terror bombing, abortion, and euthanasia among others.

Medical education as moral formation: an Aristotelian account of medical professionalsim.

The medical professionalism movement, bolstered by many influential medical organizations and institutions, has in the last decade produced a number of conceptual definitions of professionalism and a number of concrete proposals for its measurement and teaching. These projects, however laudable, are misguided when they treat professionalism as a unitary descriptive concept rather than as a contested and therefore primarily evaluative one; when they conceive professionalism as a domain of medical practice separable in principle from other domains; and when they treat professionalism as, in principle, a specifiable goal or product of sufficiently well designed educational curricula. The logic of professionalism-as-product corresponds to the logic of techne (art or practical skill) in Aristotle's Nicomachean Ethics. Aristotle provides a cogent argument, however, that the moral excellences denoted by "professionalism" cannot be "produced" or even prespecified in the concrete; rather, they must be acquired through long practice under the careful concrete guidance of teachers who themselves embody these moral excellences. Phronesis (practical wisdom) rather than techne must therefore be the guiding logic of educational initiatives in medical professional formation, with particular emphasis on close mentorship and on the moral character both of students and of those who teach them.

Moral masochism: on the connection between guilt and self-punishment.

Do people sometimes seek to atone for their transgressions by harming themselves physically? The current results suggest that they do. People who wrote about a past guilt-inducing event inflicted more intense electric shocks on themselves than did those who wrote about feeling sad or about a neutral event. Moreover, the stronger the shocks that guilty participants administered to themselves, the more their feelings of guilt were alleviated. We discuss how this method of atonement relates to other methods examined in previous research.

Prototypes, exemplars, and theoretical & applied ethics

Concepts are mental representations that are the constituents of thought. EdouardMachery claims that psychologists generally understand concepts to be bodies of knowledge or information carrying mental states stored in long term memory that are used in the higher cognitive competences such as in categorization judgments, induction, planning, and analogical reasoning. While most research in the concepts field generally have been on concrete concepts such as LION, APPLE, and CHAIR, this paper will examine abstract moral concepts and whether such concepts may have prototype and exemplar structure. After discussing the philosophical importance of this project and explaining the prototype and exemplar theories, criticisms will be made against philosophers, who without experimental support from the sciences of the mind, contend that moral concepts have prototype and/or exemplar structure. Next, I will scrutinize Mark Johnson's experimentally-based argument that moral concepts have prototype structure. Finally, I will show how our moral concepts may indeed have prototype and exemplar structure as well as explore the further ethical implications that may be reached by this particular moral concepts conclusion. © 2011 Springer Science+Business Media B.V.

Knowledge and judgments about events that occurred prior to birth: The measurement of the persistence of information

Data from five laboratories using five different techniques were reanalyzed to measure subjects' knowledge of events that occurred over the past 70 years. Subjects were about 20 years of age, so the measures included events that extended up to 50 years before birth. The functions relating knowledge about the events to age do not decrease precipitously at birth but gradually drop to above-chance levels. Techniques usually used to study retention within the individual can be used to study the persistence of ideas and fashions within an age cohort in a culture.