Economic Preferences Research Articles

Looming Large or Seeming Small? Attitudes Towards Losses in a Representative Sample

Abstract We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N=3,000). We find that around 50% of the U.S. population is loss tolerant—they are willing to accept negative-expected-value gambles that contain a loss. This is counter to expert predictions and earlier findings—which mostly come from laboratory/student samples—that 70–90% of participants are loss averse. Consistent with the different findings in our study versus the prior literature, loss aversion is more prevalent in people with high cognitive ability. Further, our measure of gain–loss attitudes exhibits similar temporal stability and better predictive power outside our survey than measures of risk aversion. Loss-tolerant individuals are more likely to report recent gambling, investing a higher percentage of their assets in stocks, and experiencing financial shocks. These results support the general hypothesis that individuals value gains and losses differently, and that gain–loss attitudes are an important economic preference. However, the tendency in a large proportion of the population to emphasize gains over losses is an overlooked behavioural phenomenon.

The ambiguous impact of populist trade discourses on the international economic order

Abstract The relationship between populism and free trade has historically been a complex one. This article argues that populism affects trade not by expressing consistent economic preferences, but by operating as a discourse that articulates external policies as a struggle for popular recognition. We analyse trade discourses of Donald Trump and Brexiteers following their victories in the 2016 United States presidential election and the referendum on European Union membership in the United Kingdom. These populist movements expressed opposing trade preferences: Trumpism was identified with protectionism, while Brexiteers supported free trade. However, they both articulated trade as a way to regain popular sovereignty from elites and hostile outsiders. A discursive approach helps identify a common logic in how populists articulate foreign relations despite pursuing nominally opposing policies. While this populist logic pertains primarily to domestic mobilization, it has implications for the international order as well, as evidenced in the persistence of protectionist instincts in the US under President Biden and the acceptance of a ‘global’ trade policy outside the EU as the new frame of reference for UK external economic relations.

A multinational analysis of how emotions relate to economic decisions regarding time or risk.

Emotions have been theorized to be important drivers of economic choices, such as intertemporal or risky decisions. Our systematic review and meta-analysis of the previous literature (378 results and 50,972 participants) indicates that the empirical basis for these claims is mixed and the cross-cultural generalizability of these claims has yet to be systematically tested. We analysed a dataset with representative samples from 74 countries (n = 77,242), providing a multinational test of theoretical claims that individuals' ongoing emotional states predict their economic preferences regarding time or risk. Overall, more positive self-reported emotions generally predicted a willingness to wait for delayed rewards or to take favourable risks, in line with some existing theories. Contrary to the assumption of a universal relationship between emotions and decision-making, we show that these relationships vary substantially and systematically across countries. Emotions were stronger predictors of economic decisions in more economically developed and individualistic countries.

Dynamic optimization design of open-pit mine full-boundary slope considering uncertainty of rock mass strength

Rock and soil strength profoundly influences the stability of open-pit mine slopes. Traditional slope design, based on limited drilling data, often disregards inherent uncertainties. Effectively utilizing new sample information from mining operations poses a challenge, hindering dynamic and differentiated design for the entire perimeter slope. To address this, we propose a dynamic optimization method considering rock mass strength uncertainty for the entire perimeter slope. Our approach involves designing slope angles separately in different zones, while thoroughly considering decision-makers' preferences. Furthermore, we delegate the final adjustment authority of slope angles within the safety permissible range to on-site decision-makers. Compared to traditional methods, our dynamic design method incorporates rock mass strength uncertainty into slope evaluation while also accounting for decision-makers' safety and economic preferences. Through a case study of a specific open-pit mine, our proposed dynamic design method increases the overall slope angle by approximately 2.5°, fully accommodating the influence of on-site decision-making preferences on slope design. This article introduces a new method of dynamic optimization of open-pit mine slope based on simplified observation method, which improves the flexibility of decision-making and realizes the differential design of the whole surrounding slope.

Traffic violations and economic preferences: Evidence from full-time drivers of a large transportation network company in China

Safety has been a consistent issue with the rise of transportation network companies (TNCs), especially in China with annual revenue exceeding 1.5 trillion CNY. In this paper, we explore intrinsic factors that can influence the risky behavior of TNC drivers by investigating the link between their economic preference parameters and traffic violations. We measure the economic preferences of 160 full-time drivers on a large Chinese TNC platform and examine their violations over the previous 13 months. We have four major findings. First, more risk-averse drivers have less violations. Second, present bias and patience do not affect drivers' risky behavior except that more patient drivers commit more direction|sign violations, which may have been caused by the higher expectation of the gain from such a violation of patient drivers. Third, reciprocity reduces violations of all types. Drivers' belief of other people's pro-social inclination only affects dangerous violations with long duration, i.e., speeding, in which case they take advantage of other people's attentiveness. And finally, we find no evidence of driver fatigue. These results highlight how the advantage of TNC platforms in managing drivers' incentive can affect the negative externality drivers impose through risky driving behavior, and hence provide policy implications.

Institutional quarantine and economic preferences: Experimental evidence from China

Quarantine is a public health measure that has been used for centuries to curb the spread of infectious diseases, but its social costs remain underexplored. Based on a quarantine event, we conduct online lab-in-the-field experiments in China to examine the effect of institutional quarantine on economic preferences. We find that institutional quarantine reduces social preferences (altruism, trust, and trustworthiness), but has no effect on risk and time preferences. These effects persist throughout the quarantine period. Notably, expressing gratitude through a thank-you note during quarantine can mitigate the adverse effects of institutional quarantine on altruism and trust, though not on trustworthiness. Trust returns to pre-quarantine levels about six months later, altruism also fully recovers after one year and two months, but trustworthiness does not. Policymakers should develop strategies to mitigate the negative social impacts of institutional quarantine.

The Association between Psychological and Behavioral Economic Factors and the Rapid Assessment Disuse Index (RADI) during the COVID-19 Pandemic.

The deleterious health effects of prolonged sitting and physical inactivity are well-established, yet these behaviors are pervasive in modern culture. To inform interventions aimed at reducing sedentary behavior and increasing lifestyle activity, this study examined psychological and behavioral economic factors that may be associated with these behaviors. This cross-sectional study was conducted among 4072 adults in Israel. Participants completed a survey pertaining to lifestyle behaviors and economic preferences using an online platform in September 2020. The psychological and behavioral economic factors of interest were patience, self-control, risk-taking, grit, and general self-efficacy. Sedentary behavior and lifestyle activity (e.g., time spent moving about) was assessed using the Rapid Assessment Disuse Index (RADI) tool (higher score indicative of more sitting and less activity). Multivariable linear and logistic regression analyses examined the association between psychological and behavioral economic factors and RADI score. Among 4072 participants, those who were impatient (vs. patient, β: -1.13; 95% CI: -1.89, -0.38) had higher grit (β: -1.25, 95% CI: -1.73, -0.77), and those who were more risk-seeking (β: -0.23; 95% CI: -0.33, -0.13) had lower RADI scores (i.e., less sedentary, more active). Significant associations for grit and risk-taking were also observed when the RADI score was dichotomized, such that individuals who had higher grit or were more risk-seeking were more likely to be non-sedentary/active. No significant associations were observed for self-control or general self-efficacy. Higher grit and more risk-seeking were associated with a decreased propensity for sedentary behaviors and inactivity; these factors may provide targets for interventions aimed at reducing sedentary behavior and increasing lifestyle activity.

Religion, personality, or none of them? Exploratory evidence on their correlations with economic preference parameters.

Previous empirical research in the social sciences suggests sizable differences across religious denominations for various outcomes of interest, such as educational attainment, marital stability, wealth, or fertility. A small body of previous experimental literature has investigated possible differences in economic preference parameters (including time preference and risk attitude) between religious denominations that might explain those differences. This research adds to the extant literature on religion and preferences by including information on subjects' Big Five personality traits and analyzing potential correlations with loss aversion. It combines experimental data from incentivized choices with information on religious affiliation during high school and Big Five personality traits to test for possible correlations of religious denomination with risk attitude, time preference, and loss aversion, using Bayesian analysis of variance (ANOVA) and Bayesian regression analysis. Bayesian ANOVA results suggest no preference differences between the religions analyzed in this research. When controlling for Big Five personality traits and a host of other background variables, Bayesian regression results suggest no effects of either religious affiliation or Big Five personality traits measures on the three economic preference parameters analyzed here. These findings highlight the complexity of the relationship between religion, personality traits, and economic preference parameters, suggesting that previously observed differences may be influenced by the preference measures used or other unobserved factors.

Are economic preferences shaped by the family context? The relation of birth order and siblings’ gender composition to economic preferences

The formation of economic preferences in childhood and adolescence has long-term consequences for life outcomes. We study in an experiment how both birth order and siblings’ gender composition are related to risk, time, and social preferences. We find that second-born children are typically less patient, more risk-tolerant, and more trusting. However, siblings’ gender composition interacts importantly with birth order effects. Second-born children are more risk-taking only with same-gender siblings. In mixed-gender environments, children seem to identify with the gender stereotype that boys are much more willing to take risks than girls, irrespective of birth order. For trust and trustworthiness, birth order effects are larger with mixed-gender siblings. Only for patience, siblings’ gender composition does not matter.

Research on water resources collaborative utilization based on complex networks: A case study of the Han River Basin

As China's social economy grows and the demand for water resources increases, the Han River Basin faces intensified supply-demand conflicts, reducing water resource utilization efficiency and threatening regional development. To address this, a network evolutionary game model based on complex network and evolutionary game theory was developed for collaborative water resource utilization. The study identified key dynamic factors influencing the game in the Han River Basin and analyzed its evolutionary rules. Simulations revealed that the profit-loss ratio and profit distribution rate significantly affect cooperative behavior. Furthermore, the network's topology exhibits small-world characteristics, and factors such as economic preferences, income distribution, and reward-punishment coefficients critically influence cooperation. Considering the current state of water resources and economic development, it is projected that comprehensive cooperation in the basin may take around 11 years to establish.

Preventable mortality, related socioeconomic, and cultural factors across European countries

Preventable mortality is a societal burden, impacting significantly on a country’s economy. The aim of this study is to identify the factors associated with the preventable mortality rate across European countries. The major contribution of this study comes from the consideration of cultural values to be related with preventable mortality. The cultural values taken into consideration are uncertainty avoidance and long-term orientation which have a strong correlation with economic preferences. For this purpose, panel data from 27 countries was collected for the period 2011–2019. Various models were applied to the dataset, including least squares dummy variable regression, AR(1) model, as well as Driscoll-Kraay, Prais-Winstein, and Hausman-Taylor models. Results show that while preventable mortality rate across European countries closely correlates with GDP per capita, social security expenditures, and air pollution, it is also associated with immigrants per capita and health expenditures. The key findings point to the relationship between cultural values and preventable mortality. These results show that designing effective policies and measures to reduce preventable mortality need to account for the cultural traits of the population.

Aligning working‐class interests and preferences: The case of inheritance tax

AbstractThis article addresses a lack of alignment between the material interests and economic preferences of the working class. It argues that the link between class interest and support for specific economic policies that benefit the working class becomes stronger when it is made clear that the policy targets the rich. Working‐class support for the repealed and unpopular inheritance tax in Norway is chosen as a hard test of this argument. Employing two straightforward survey experiments, this article demonstrates that clarifying who will pay the tax raises support in general and is especially important for ensuring the support of the working class. Further analysis shows that class differences, when the tax is explicitly redistributive, can be accounted for by general redistributive orientation. Additionally, differences in education levels partly explain why clearer class differences in tax support are not observed. This study underscores the importance of considering both the demand and supply sides when examining the economic preferences of social classes and highlights that clearly formulating who pays the tax is crucial for garnering support from working‐class voters.

Deconstructing the gender-equality paradox.

Studies advancing the hypothesis of a "gender-equality paradox" have found that societies with more gender equality demonstrate larger gender differences across a range of phenomena. In doing so, they rely on that practice of predicting an algebraic difference score-calculated from mean scores for men and women across a set of countries-with an index of gender equality or some related concept. We argue that direct difference score predictions of this type are impossible to interpret because very different combinations of constituents-mean scores of men and women and properties of these means-can produce identical direct difference score predictions. We reanalyzed three large cross-cultural data sets with 15 variables from three different domains-attitudes toward science and technology, economic preferences, and personality traits-to showcase our method of deconstructing difference score predictions and to investigate to what extent the rhetoric of the gender-equality paradox describes a real phenomenon. The results were highly heterogeneous. For some characteristics, men's and women's country-level means varied identically as a function of country-level gender equality (no paradox). For other characteristics, there were differences in how men's and women's means varied. Whether these differences could be described in the rhetoric of the paradox varied. More pertinent is the necessity of deconstructing difference score predictions into their constituent components before attempting to answer questions regarding a paradox. It is in the terminology of these components and their properties that future hypotheses should be tested. (PsycInfo Database Record (c) 2024 APA, all rights reserved).

Comparing carbon offsets and livelihood benefits in a long‐term reforestation project: Agroforestry versus native timber versus enrichment planting

Abstract Indigenous People and Local Communities (IPLC) can play an important role in reforestation for climate change mitigation while providing environmental and livelihood benefits. However, there is a lack of direct comparison between different reforestation design's carbon uptake potential and their relevance to community reforestation. We evaluate the carbon capture and survival of the four most common reforestation designs in a 14‐year‐long project in an Emberá community in eastern Panama. We look at native timber mixtures and monocultures, agroforestry, and natural regrowth with enrichment planting. To explain the differences between plots, we compare design, management and environmental characteristics using redundancy analyses (RDA). We then contextualize our results with the project leader's perspectives of success using interviews and workshops. In the first decade, mixtures and monocultures of timber stored on average roughly 3× more carbon than agroforestry and enrichment planting (140 tCO2/ha compared to 40 tCO2/ha and 53 tCO2/ha). The project design had the largest influence on carbon storage and survival with an explanatory power of 31% followed by management and environmental characteristics (14% and 2% respectively). The largest threat to the survival and growth was the risk of fire which caused mortality in more than 2/3 of the plots. Some damage was offset by natural regrowth which accounted for 34% of the total carbon, but the participants generally perceived natural regrowth as being “dirty.” They had a strong preference for agroforestry, particularly coffee (Coffea spp.), a crop with negligible carbon value, but high economic value. ‘Practical implication’: The findings underscore the need to balance carbon sequestration with local economic preferences, integrate community input, mitigate environmental risks and adopt long‐term, holistic approaches for effective reforestation projects.

Accounting for Individual-Specific Reliability of Self-Assessed Measures of Economic Preferences and Personality Traits

Accounting for Individual-Specific Reliability of Self-Assessed Measures of Economic Preferences and Personality Traits

COVID-19 and economic preferences: Evidence from a panel of cab drivers

This paper studies the impact of the COVID-19 pandemic on risk and time preferences. Using a longitudinal dataset from a survey of cab drivers in Lima (Peru), we document a significant increase in risk tolerance and patience. The changes are heterogeneous and monotonic by age: older cohorts become more risk-taking while younger ones become more patient. Our findings suggest that the pandemic could have affected individuals’ behavior and socioeconomic outcomes via another channel, namely, changes in economic preferences.

SPECIAL ECONOMIC ZONES: BASIC PREFERENCES AND LEGAL REGULATION

The article is dedicated to the definition of the peculiarities of legal regulation of creation and functioning of special economic zones on the territory of Ukraine. The main preferences have been characterized, which are provided to ensure the liberalized regime of such zones. The classification of preferences has been carried out in accordance with the nature, grounds and consequences of the implementation. It has been classified: the fiscal and organizational; the political and economic preferences; the preferences for foreign and domestic investors; as well as the preferences based on domestic legislation and/or on the norms of the international agreements. The relevance of the research subject is due to the need to form an updated concept of legislative regulation of the regimes of special economic zones in Ukraine. The methodological basis of the research is formed by general scientific and special legal methods of scientific knowledge (dialectical, analysis and synthesis, scientific abstraction, forecasting). The article is aimed at formulating the basic scientific principles for updating the normative regulation and practical application of the preferential regime of special economic zones in Ukraine in the post-war period, determining the essence and characteristics of the main privileges and simplifications used in them. The task of the article is the developing proposals for the formation of a theoretically-applied basis for updating the current legislation of Ukraine on special economic zones and improving the legal regulation of their regimes. The article has characterized and analyzed the norms of laws and by-laws acts, aimed at regulating relations in the sphere of functioning of special economic zones in Ukraine, their insufficient character has been noted. The levels of such legal regulation have been defined: the national and local. It has been proposed to update the regulatory basis of the special economic zone in the Danube region, due to its significant importance and growth in 2022-2024.

What Forms of Redistribution Do Americans Want? Understanding Preferences for Policy Benefit-Cost Tradeoffs

Political scientists agree that most Americans are “operationally liberal.” However, economic preferences have traditionally been measured as opinions on public spending, independent from the “costs” of public policies. In reality, redistributive economic policies often impose costs on some actors while delivering benefits to others. When a policy’s costs and benefits are both apparent, what types of redistribution do Americans prefer? This paper’s novel survey evidence shows that preferences for policy benefits are indeed sensitive to which subgroups would bear the policy’s costs (and vice versa). American majorities do support a wide range of redistributive economic policy packages—as long as the wealthy are footing the bill or the costs are hidden. When the size of the group facing the policy cost (e.g., tax) increases, overall support declines. Preference differences between Republicans of varying economic statuses are large, while divisions within the Democratic coalition are subtler but still clear on certain policies. Overall, this paper shows that measuring preferences for a policy's costs (e.g., taxation) are crucial to truly understanding voters’ holistic economic policy demands. Further, the lack of enactment by political elites of the forms of redistribution consistently supported by the public casts research on democratic representation in new light.

Misperceived Social Norms and Willingness to Act Against Climate Change

Abstract We document the individual willingness to act against climate change and study the role of social norms in a large sample of US adults. Individual beliefs about social norms positively predict pro-climate donations, comparable in strength to universal moral values and economic preferences. However, we document systematic misperceptions of social norms. Respondents vastly underestimate the prevalence of climate-friendly behaviors and norms. Correcting these misperceptions in an experiment causally raises individual willingness to act against climate change and individual support for climate policies. The effects are strongest for individuals who are skeptical about the existence and threat of global warming.

Comparing experience- and description-based economic preferences across 11 countries.

Recent evidence indicates that reward value encoding in humans is highly context dependent, leading to suboptimal decisions in some cases, but whether this computational constraint on valuation is a shared feature of human cognition remains unknown. Here we studied the behaviour of n = 561 individuals from 11 countries of markedly different socioeconomic and cultural makeup. Our findings show that context sensitivity was present in all 11 countries. Suboptimal decisions generated by context manipulation were not explained by risk aversion, as estimated through a separate description-based choice task (that is, lotteries) consisting of matched decision offers. Conversely, risk aversion significantly differed across countries. Overall, our findings suggest that context-dependent reward value encoding is a feature of human cognition that remains consistently present across different countries, as opposed to description-based decision-making, which is more permeable to cultural factors.