Working Paper: NBER ID: w20146
Authors: Raymond Fisman; Pamela Jakiela; Shachar Kariv
Abstract: We compare behavior in experiments measuring distributional preferences during the "Great Recession" to behavior in identical experiments conducted during the preceding economic boom. Subjects are drawn from a diverse pool of students whose socioeconomic composition is largely held constant by the university, mitigating concerns about differential selection across macroeconomic conditions. Subjects exposed to the recession are more selfish and more willing to sacrifice equality to enhance efficiency. Reproducing recessionary conditions inside the laboratory by confronting subjects with losses has the same impact on distributional preferences, bolstering the interpretation that economic circumstances, rather than other factors, are driving our results.
Keywords: Distributional Preferences; Great Recession; Economic Conditions; Experimental Economics
JEL Codes: C79; C91; D63; D64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Recessionary conditions (E32) | greater levels of indexical selfishness (D64) |
| Recessionary conditions (E32) | stronger preference for efficiency over equality (D63) |
| Loss recession (LR) (J63) | higher fraction of tokens allocated to self (H77) |
| Gain recession (GR) (F62) | higher fraction of tokens allocated to self (H77) |
| Gain boom (GB) (Q33) | lower fraction of tokens allocated to self (H77) |
| Experimental loss treatment (C22) | increases both selfishness and efficiency orientation (D61) |
| Economic conditions (E66) | shifts in distributional preferences (D39) |