Measuring Socially Appropriate Social Preferences

Abstract

This paper extends the literature on structural estimation of social preferences to account for the desire to adhere to social norms and hide one's true intentions via moral wiggle room. We conduct an experiment to test whether accounting for normatively appropriate behavior allows us to distinguish between preference types who care about outcomes versus adhering to social norms and whether the introduction of moral wiggle room undermines the stability of social preference estimates. We find that social preference estimates are remarkably robust to the inclusion of moral wiggle room. However, the representative agent is strongly motivated by norms and failing to account for this motive in our model causes us to overestimate how much agents care about helping those who are worse off. Using finite mixture models to endogenously identify latent preference types, we replicate previous work finding that the majority of subjects can be classified as strong or moderate altruists when normative concerns are not considered. Accounting for the normative appropriateness of decisions when categorizing participants, however, reveals different motives across types: strong altruists are only marginally concerned with norms while the moderate altruists are highly sensitive to them and, once norms are taken into account, don't care at all about the outcomes of others. Our results thus recast the prior findings in a new light. Rather than the two most common types being strong altruists and moderate altruists, we find that they are better described as strong altruists and norm followers.