Monthly Archives: March 2008

Of behavioral economics, The New Yorker, climate change and soft paternalism

In What Was I Thinking, the New Yorker reviews two books on behavioral economics: “Predictably Irrational: The Hidden Forces That Shape Our Decisions” by Dan Ariely and “Nudge: Improving Decisions About Health, Wealth, and Happiness” by Richard H. Thaler and Cass R. Sunstein.

The New York Times also discusses Nudge and the idea of soft paternalism the book supports in A Nudge (or Is it a Shove?) To the Unwise: “For the case against nudges, see “Paternalism and Psychology,” (PDF) an essay by the Harvard economist Edward Glaeser. For the case in favor, see “Nudge” or this essay by Mr. Sunstein and Dr. Thaler.”

Another article in the New York Times, Are We Ready to Track Carbon Footprints?, discusses Nudge in relation to climate change. Here is an extract:

The authors of “Nudge,” Cass Sunstein and Richard Thaler of the University of Chicago, agree with economists who’d like to reduce greenhouse gas emissions by imposing carbon taxes or a cap-and-trade system, but they think people need extra guidance. Getting the prices right will not create the right behavior if people do not associate their behavior with the relevant costs,” says Dr. Thaler, a professor of behavioral science and economics. “When I turn the thermostat down on my A-C, I only vaguely know how much that costs me. If the thermostat were programmed to tell you immediately how much you are spending, the effect would be much more powerful. It would be still more powerful, he and Mr. Sunstein suggest, if you knew how your energy consumption compared with the social norm.” read more

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Of punishment and punishers

Punishment as a means to maintain cooperation was pop this March.

It was discussed in Nature 20 March 2008 in the article by Dreber, Rand, Fudenberg, and Nowak Winners don’t punish, as well as in the Editor’s Summary Victors don’t punish, and in the comment by Milinski and Rochenbach Human behavior: Punisher pays.

In a nutshell: researchers haven’t quite figured out why costly punishment in social-dilemma situations has evolved. On the basis of experimental evidence, Dreber et al. suggest that costly punishment is maladaptive as it does not pay off for the punisher nor for the group. Even if costly punishment frequently induces cooperation, it does not seem possible that it may have evolved for inducing cooperation. Moreover, in some instances costly punishment does not even enhance cooperation: In some societies, it is not only free-loaders who are punished but also high contributors. As a result the cooperation-enhancing effect of punishment is removed or at best dampened.

Herbert Gintis in Punishment and Cooperation on Science 7 March 2008 discusses the punishment of high contributors, that is, antisocial punishment. Antisocial punishment reduces both contributions and altruistic punishment by high contributors.

Interestingly, there appear to be significant cultural differences in the use of antisocial punishment. Herrmann, Thöni and Gächter in Antisocial Punishment Across Societies, Science 7 March 2008, found that among the countries included in their study, those high in political rights, civil liberties, and press freedom as measured by World Democracy Audit (WDA) were low in antisocial behavior. On the other hand, countries with a high level of antisocial punishment, had a low score on the WDA evaluation.

Here is the abstract

We document the widespread existence of antisocial punishment, that is, the sanctioning of people who behave prosocially. Our evidence comes from public goods experiments that we conducted in 16 comparable participant pools around the world. However, there is a huge cross-societal variation. Some participant pools punished the high contributors as much as they punished the low contributors, whereas in others people only punished low contributors. In some participant pools, antisocial punishment was strong enough to remove the cooperation-enhancing effect of punishment. We also show that weak norms of civic cooperation and the weakness of the rule of law in a country are significant predictors of antisocial punishment. Our results show” that punishment opportunities are socially beneficial only if complemented by strong social norms of cooperation.”

Carbonomics on Free Exchange

From The Economist Blog Free Exchange:

STEVEN LEVITT, Freakonomist, can expect an angry letter from Greg Mankiw. At Mr Levitt’s New York Times blog today, he says:At least some choices are beyond reproach environmentally. It is clearly better for the environment to walk to the corner store rather than to drive there. Right?

Now even this seemingly obvious conclusion is being called into question by Chris Goodall via John Tierney’s blog. And Chris Goodall is no right-wing nut; he is an environmentalist and author of the book How to Live a Low-Carbon Life.” Read more from Free Exchange