resolving new keynesian anomalies with wealth in the utility function at the zero lower bound the new keynesian model predicts that output and inflation collapse to implausibly low levels and that government spending and forward guidance have implausibly large effects to resolve these anomalies we introduce wealth into the utility function the justification is that wealth is a marker of social status and people value status since people partly save to accrue social status the euler equation is modified as a result when the marginal utility of wealth is sufficiently large the dynamical system representing the zero lower bound equilibrium transforms from a saddle to a source which resolves all the anomalies

decisions under uncertainty in social contexts abstract this paper theoretically and experimentally studies decision making in risky and social environments we explore the interdependence of two decisive behavioral determinants in such environments risk attitudes and social preferences in the form of inequality aversion our model and the data demonstrate that individual risk aversion is attenuated when lagging behind peers whereas it is amplified under favorable income inequality moreover people s choices are not only context dependent but they are sensitive to their degree of inequality aversion the majority of our experimental findings cannot be rationalized by rank dependent utility models or cumulative prospect theory our results contribute to the basic understanding of the underlying motives of social incentives in firms private households saving decisions employees career track choices or charitable giving under uncertainty

an economic analysis of acting white this paper formalizes a widely discussed peer eect entitled acting white acting white is modeled as a two audience signaling quandary signals that induce high wages can be signals that induce peer group rejection without peer eects equilibria involve all ability types choosing dierent levels of education acting white alters the equilibrium dramatically the possibly empty set of lowest ability individuals and the set of highest ability individuals continue to reveal their type through investments in education ability types in the middle interval pool on a common education level only those in the lower intervals are accepted by the group the model s predictions t many stylized facts in the anthropology and sociology literatures regarding social interactions among minority group members

awards unbundled evidence from a natural field experiment organizations often use non monetary awards to incentivize performance awards may affect behavior through several mechanisms by conferring employer recognition by enhancing social visibility and by facilitating social comparison in a nationwide health worker training program in zambia we design a field experiment to unbundle these mechanisms we find that employer recognition and social visibility increase performance while social comparison reduces it especially for low ability trainees these effects appear when treatments are announced and persist through training the findings are consistent with a model of optimal expectations in which low ability individuals exert low effort in order to avoid information about their relative ability

relative wealth status seeking and catching up abstract according to our studies if relative wealth appears in the reduced form utility function for example because of status seeking then the poor will catch up with the rich if the elasticity of marginal utility of relative wealth is greater than the elasticity of marginal utility of consumption we give sufficient conditions for the final distribution of wealth to be independent of the initial distribution and conditions for saddlepoint stability in a two class model

keeping up with the ageing joneses in this paper we consider the implications of relative consumption externalities in the blanchard yaari overlapping generations framework unlike most of the macroeconomic literature that studies this question the differences between agents and thus in their relative position persist in equilibrium we show in our fixed employment model that consumption externalities lower consumption and the capital stock in long run equilibrium a result in sharp contrast to the recent findings of liu and turnovsky 2005 in addition we solve for the intertemporal path of the economy to investigate its response to demographic shocks specifically to permanent changes in the birth and death rates

status goods experimental evidence from platinum credit cards this paper provides novel evidence on status goods using a series of field experiments with an indonesian bank that markets platinum credit cards to high income customers in a first experiment the paper shows that demand for the platinum card greatly exceeds demand for a nondescript control product with identical benefits suggesting demand for the pure status aspect of the card transaction data reveal that platinum cards are more likely to be used in social contexts implying social image motivations combining price variation with information on the use of the card sheds light on the magnitude of the demand for social status a second experiment provides evidence of positional externalities from the consumption of these status goods the final experiment shows that increasing self esteem causally reduces demand for status goods this suggests that part of the demand for status is psychological in nature and that social image is a substitute for self image

misperceived social norms women working outside the home in saudi arabia we show that the vast majority of young married men in saudi arabia privately support women working outside the home wwoh and substantially underestimate support by other similar men correcting these beliefs increases men s costly willingness to help their wives search for jobs months later wives of men whose beliefs were corrected are more likely to have applied and interviewed for a job outside the home in a recruitment experiment with a local company randomly informing women about actual support for wwoh leads them to switch from an at home temporary enumerator job to a higher paying outside the home version of the job

how does peer pressure affect educational investments when effort is observable to peers students may try to avoid social penalties by conforming to prevailing norms to test this hypothesis we first consider a natural experiment that introduced a performance leaderboard into computer based high school courses the result was a 24 percent performance decline the decline appears to be driven by a desire to avoid the leaderboard top performing students prior to the change those most at risk of appearing on the leaderboard had a 40 percent performance decline while poor performing students improved slightly we next consider a field experiment that offered students complimentary access to an online sat preparatory course sign up forms differed randomly across students only in whether they said the decision would be kept private from classmates in nonhonors classes sign up was 11 percentage points lower when decisions were public rather than private honors class sign up was unaffected for students taking honors and nonhonors classes the response depended on which peers they were with at the time of the offer and thus to whom their decision would be revealed when offered the course in a nonhonors class where peer sign up rates are low they were 15 percentage points less likely to sign up if the decision was public but when offered the course in an honors class where peer sign up rates are high they were 8 percentage points more likely to sign up if the decision was public thus students are highly responsive to their peers are the prevailing norm when they make decisions

peer effects in financial decision making abstract peer effects might play an important role in complex financial decisions because many consumers lack experience with them and the costs of thinking through such decisions can be very high we study peer effects in retirement savings life insurance purchase and two charitable giving programs in a military setting with plausibly exogenous assignment of individuals to social groups peers defined broadly as social groups which may include members of different ranks appear to play an important role in the charitable giving programs but not in the other outcomes we assess a number of potential reasons for the disparate findings and provide suggestive evidence that the observability of individuals choices is key

the long run consequences of living in a poor neighborhood author s oreopoulos philip abstract many social scientists presume that the quality of the neigborhood to which children are exposed affects a variety of long run social outcomes i examine the effect on the long run labor market outcomes of adults who were assigned when young to substantially different public housing projects in toronto administrative data are matched to public housing addresses to track children from the program for over 15 years the main finding is that neighborhood quality plays little role in determining a youth s adult earnings education attainment or welfare participation but does affect exposure to crime while living in contrasting housing projects cannot explain large variances in labor market outcomes family differences as measured by sibling outcome correlations account for up to 30 percent of the total variance in the data

sect subsidy and sacrifice an economist s view of ultra orthodox jews israeli ultra orthodox men study full time in yeshiva until age 40 on average why do fathers with families in poverty choose yeshiva over work draft deferments subsidize yeshiva attendance yet attendance typically continues long after exemption fertility rates are high tfr 7 6 and rising a social interaction approach explains these anomalies yeshiva attendance signals commitment to the community which provides mutual insurance to members prohibitions strengthen communities by effectively taxing real wages inducing high fertility historically the incursion of markets into traditional communities produces ultra orthodoxy subsidies induce dramatic reductions in labor supply and unparalleled increases in fertility illustrating extreme responses social groups may have to interventions

jealousy and underconsumption in a one sector model with wealth preference abstract the present paper examines the effects of consumption externalities on economic performance in a one sector model with wealth preference the presence of the wealth preference generates a wealth effect in consumption growth which plays a crucial role for consumption externalities to have impacts on the economy our main findings are i regardless of the assumption of inelastic labor supply the distortionary effect of consumption externalities stays in the long run ii the income tax as well as the consumption tax can modify the efficiency and iii the numerical simulations supplement theoretical findings

peers at work we study peer effects in the workplace specifically we investigate whether how and why the productivity of a worker depends on the productivity of coworkers in the same team using high frequency data on worker productivity from a large supermarket chain we find strong evidence of positive productiv ity spillovers from the introduction of highly productive personnel into a shift worker effort is positively related to the productivity of workers who see him but not workers who do not see him additionally workers respond more to the presence of coworkers with whom they frequently interact we conclude that social pressure can partially internalize free riding externalities that are built into many workplaces jel j24 l81 m54

efficient alleviation of poverty and hunger a new international assistance facility abstract the numbers of poor are large and have been increasing with the economic crisis in the 1980s structural adjustment through policy reforms and additional resource transfers hold promise for the long run elimination of poverty in the interim more special programmes are needed to augment the purchasing power of the poorest but such programmes need to transfer income efficiently and wherever possible in conjunction with projects that increase human and physical capital food aid can play a major role but not through direct distribution of food to households more direct income transfer mechanisms are discussed in this article the establishment of an international poverty and hunger alleviation facility is recommended such a facility could be funded with an appropriate mix of food and financial aid presently idle food stocks could provide approximately half of the additional required resources

wealth seeking reconsidered abstract if individuals are interested in their relative wealth position they engage in contests for wealth this leads to a steady state with overaccumulation in a simple growth model it is shown that if some individuals are engaged in wealth seeking activity but others are not the latter might benefit however wealth seeking is not welfare enhancing under usual assumptions concerning production technology the steady state equilibrium is characterized by a marginal productivity of capital that is below the steady state rate of time preference and by emergence of a class structure

food losses in food service institutions examples from sweden lowering food losses is a potential measure to overcome hunger and reduce the ecological side effects from the food system however few observations of food losses have been reported in the liter

social identity and preferences social identities prescribe behaviors for people we identify the marginal behavioral effect of these norms on discount rates and risk aversion by measuring how laboratory subjects choices change when an aspect of social identity is made salient when we make ethnic identity salient to asian american subjects they make more patient choices when we make racial identity salient to black subjects non immigrant blacks but not immigrant blacks make more patient choices making gender identity salient has no effect on intertemporal or risk choices

social norms savings behavior and growth we argue that many goods and decisions are not allocated or made through markets we interpret an agent s status as a ranking device that determines how well he or she fares in the nonmarket sector the existence of a nonmarket sector can endogenously generate a concern for relative position in for example the income distribution so that higher income implies higher status moreover it can naturally yield multiple equilibria it is thus possible to explain differences in growth rates across countries without recourse to differences in underlying preferences technologies or endowments different social organizations lead to different reduced form preferences which lead to different growth rates

political identity experimental evidence on anti americanism in pakistan we identify pakistani men s willingness to pay to preserve their anti american identity using two experiments imposing clearly specified financial costs on anti american expression with minimal consequential or social considerations in two distinct studies one quarter to one third of subjects forgo payments from the u s government worth around one fifth of a day s wage to avoid an identity threatening choice anonymously checking a box indicating gratitude toward the u s government we find sensitivity to both payment size and anticipated social context when subjects anticipate that rejection will be observable by others rejection falls suggesting that for some social image can outweigh self image

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

on the origins of gender gaps in human capital short and long term consequences of teachers biases abstract we estimate the effect of primary school teachers gender biases on boys and girls academic achievements during middle and high school and on the choice of advanced level courses in math and sciences during high school in tel aviv israel we measure bias using class gender differences in scores between school exams graded by teachers and national exams graded blindly by external examiners for identification we rely on the random assignment of teachers and students to classes in primary schools our results suggest that assignment to a teacher with a greater bias in favor of girls boys has positive effects on girls boys achievements such gender biases have also positive impact on girls boys enrollment in advanced level math courses in high school these results suggest that teachers biased behavior at early stages of schooling has long run implications for occupational choices and earnings at adulthood because enrollment in advanced courses in math and science in high school is a prerequisite for post secondary schooling in engineering computer science and so on

the contingent effect of management practices this article investigates how the success of a management practice depends on the underlying values articulated by the management a large u s transportation company is in the process of fitting its trucks with an electronic on board recorder eobr to provide drivers with information on their driving performance the company also has commenced a multi year initiative to remake its internal operations the first phase of which focuses exclusively on changing values toward a greater emphasis on teamwork and empowerment in this setting a natural question is whether the optimal managerial practice consists of 1 letting each driver know his or her individual performance only or also 2 providing drivers with information about their performance with respect to other drivers using the eobr provided driver performance data we randomize these practices across sites the main result of our experiment is that 2 leads to better performance than 1 in a particular site if and only if the site has not yet received the values intervention and worse performance if it has the result is consistent with the presence of a conflict between competition based managerial practices and a shift to a cooperation based value system more broadly it highlights the role of intangible factors in determining the optimal set of managerial practices

rank as an inherent incentive evidence from a field experiment abstract money is the prime incentive considered in economic models however recent evidence indicates that people are also greatly concerned about their social rankings is this solely because rank brings tangible benefits or because in addition people have an inherent preference for high rank this paper deployed a field experiment that provides evidence for an inherent preference in the experiment vietnamese students enrolled in an english course performed significantly better on the official standardized international final test when they were told their rankings on practice tests than when they were not this result held even when this ranking information could not be reliably communicated thus severely attenuating the potential to bring tangible or status benefits

endogenous fiscal policies environmental quality and status seeking behavior abstract this paper analyzes endogenous fiscal policy in an endogenous growth model where agents care about social status and environmental quality the quest for a higher status is assimilated to a preference for capital wealth the government uses income tax to finance infrastructure and environmental protection we find that accounting for preferences for social status and environmental quality may lead to an allocation of tax revenue in favor of a cleanup effort to the detriment of infrastructure economic growth is not necessarily and negatively affected by this allocation as it is partly explained by an excessive accumulation of capital wealth due to the quest of status status seeking can however harm economic growth and environmental quality when its motive is important enough finally we show that economic growth may be consistent with environmental preservation but is not necessarily welfare improving as in the case of absence of status seeking behavior

peer effects teacher incentives and the impact of tracking evidence from a randomized evaluation in kenya to the extent that students benefit from high achieving peers tracking will help strong students and hurt weak ones however all students may benefit if tracking allows teachers to better tailor their instruction level lower achieving pupils are particularly likely to benefit from tracking when teachers have incentives to teach to the top of the distribution we propose a simple model nesting these effects and test its implications in a randomized tracking experiment conducted with 121 primary schools in kenya while the direct effect of highachieving peers is positive tracking benefited lower achieving pupils indirectly by allowing teachers to teach to their level jel i21 j45 o15

an empirical analysis of acting white abstract using a newly available data set which allows one to construct a novel measure of a student s social status we demonstrate that there are potentially important racial differences in the relationship between social status and academic achievement the effect is concentrated among students with a grade point average gpa of 3 5 or higher and more pronounced in schools with more interracial contact earlier studies showing a positive relationship between popularity and academic achievement for blacks are sensitive to the inclusion of more continuous achievement measures we argue that the data are most consistent with a model of acting white in which investments in education are taken as a signal of one s opportunity costs of peer group loyalty though imprecise estimates make definitive conclusions difficult

status concern and the exploitation of common pool renewable resources we examine the impact of social status concern in a common pool renewable resource oligopoly a small number of players share access to a common pool resource and sell their production in a common market where they are oligopolists we depart from the mainstream literature on common pool resource oligopolies by considering that each player cares about her social status we allow for two channels to impact a player s welfare harvest and profits under the first channel a player has a bump in her utility when her harvest is larger than the average harvest of the rest of the players in this case we show that the presence of this channel exacerbates the tragedy of the commons under the second channel a player enjoys a bump in her utility if she manages to earn more profits than the average profits of the other players in this case we show that social status concern may temporarily alleviate the tragedy of the commons it results in a decrease of extraction over an interval of stock sizes

achieving escape velocity neighborhood and school interventions to reduce persistent inequality abstract this paper reviews the evidence on the efficacy of neighborhood and school interventions in improving the long run outcomes of children growing up in poor families we focus on studies exploiting exogenous sources of variation in neighborhoods and schools and which examine at least medium term outcomes higher quality neighborhoods improve family safety adult subjective well being and health and girls mental health but they have no detectable impact on youth human capital labor market outcomes or risky behaviors in contrast higher quality schools can improve children s academic achievement and can have longer term positive impacts of increasing educational attainment and earnings and reducing incarceration and teen pregnancy

acting wife marriage market incentives and labor market investments do single women avoid career enhancing actions because these actions signal undesirable traits like ambition to the marriage market while married and unmarried female mba students perform similarly when their performance is unobserved by classmates on exams and problem sets unmarried women have lower participation grades in a field experiment single female students reported lower desired salaries and willingness to travel and work long hours on a real stakes placement questionnaire when they expected their classmates to see their preferences other groups responses were unaffected by peer observability a second experiment indicates the effects are driven by observability by single male peers