Social preference

Development of Social Preferences for Informal Risk Sharing: An Experimental Approach with Colombian Children

Pooja Balasubramanian, Daniel Celis and Marcela Ibanez

We trace the development of risk-sharing norms among school-age children in Colombia using panel data. We ﬁnd a substantial degree of solidarity, measured as the proportion of children who transfer income to members of the group aﬀected by an idiosyncratic negative income shock. Altruism is an essential risk-sharing motivation and develops early in life to remain relatively stable afterward. Image concerns have a relatively minor role in explaining risk sharing. Generalized reciprocity is not apparent for very young children and is evident only after 10, while strategic motives are observed only for children older than 15. Children do not display deservingness norms, and on the contrary, older children tend to decrease the value transferred when the other participant’s loss is higher.

Religious identity and altruistic giving: A field experiment with children in India

Pooja Balasubramanian, Daniel Celis and Marcela Ibanez

This paper reports a field experiment that studies altruistic motivations among children living in Mumbai. The main experimental design and procedure follow Ottoni-Wilhelm et al. (2017). Each subject makes donation decisions given a set of budgets with different endowments to the participant and the recipient, allowing us to and structurally estimate the strength of warm-glow and pure altruism in participants' motivation for giving. In addition, the experiment examines the effect of religious identity by varying the identity of beneficiaries and donors (Hindu or Muslim pupils). Finally, we elicit the warm-glow and the pure altruistic preference of the parents via survey-based experiments.

We find that warm-glow is the most important motivation for giving. Yet, when the beneficiary's identity is salient, pure altruistic preferences gain importance. Around teenage children (14 years old) display distinguishable motivations for giving to in-group and out-groups. Other factors such as religiosity and father's altruistic giving is positively correlated with the relative degree of warm-glow giving.

Formal insurance, risk sharing, and the dynamics of other-regarding preferences

Hanna Freudenreich, Marcela Ibanez, Stephan Dietrich, Oliver Musshoﬀ

In the absence of formal ﬁnancial markets, many poor households rely on the mutual exchange of transfers within informal risk-sharing networks to protect themselves against adverse events. In this paper, we present a model that explains the impact of formal insurance on the dynamics of other-regarding preferences. We test the model's predictions using a solidarity game with rural households in Mexico. Consistent with the model predictions, we ﬁnd that when shocks are collective, there is a crowding-out eﬀect on transfers and a decrease in trust on insured participants. However, when shocks are idiosyncratic, we fail to conﬁrm the predictions of the model. Transfers to non-insured members are signiﬁcantly higher when insurance is available to some network members than in a control treatment when insurance is not available. This unexpected crowding-in eﬀect on transfers leads to an increase In trust among non-insured participants. These ﬁndings suggest a need to ﬁnd optimal insurance designs that minimize the crowding-out eﬀect of formal insurance on informal risk-sharing and other-regarding preferences.

Procedural Preferences in Competitive Environments: A Field Experiment in Madagascar

Marcela Ibanez, Gerhard Riener, and Viviana Uruena

This paper considers preferences for procedural fairness in competitive environments. We test whether individuals exploit their power to unfairly leverage advantage over their competitors and compare the willingness to do so under two forms of power advantage procedures: spying or sabotaging. The results of a ﬁeld experiment in Madagascar indicate that about 40 percent of participants engage in unfair competition. Yet, they do not always use this to their advantage and instead favor their opponents. We ﬁnd no signiﬁcant diﬀerences between the two procedures, indicating that the moral cost of exploitation is similar. Exposure to higher criminal environments increases the likelihood of deceptive behavior. When advantageous interactions are allowed in a known network, altruism decreases but trust and trustworthiness do not change. This finding suggests that individuals internalize pre-existing norms and that crime has persistent and long-term eﬀects.

Community Aspirations and Collective Action

Christina Martini, Marcela Ibanez Diaz and Menusch Khadjavi

We propose that community aspirations deﬁned as the preferences for goals that increase communal well-being are essential for cooperation in collective action problems. This paper conceptualizes community aspirations and investigates whether the proposed measure is associated with cooperation. The second part of the paper presents the results of a randomized controlled trial aimed at lifting community aspirations by giving real-world examples of successful collective action. Survey and experimental data from rural Zambia indicate that individuals hold optimistic community aspirations compared with the current situation. We ﬁnd some supporting evidence for a positive correlation between community aspirations and cooperation measured using experimental and survey data. Exposure to the examples of collaboration increases cooperation but harms community aspirations. Instead, we ﬁnd that the mechanism could be through a change in the perceived norm of cooperation.

Community Aspirations and Cooperation: Prescriptive vs.Descriptive Role Models

Marcela Ibanez Diaz, Menusch Khadjavi and Christina Martini,

This paper examines the hypothesis that cooperation depends on individuals' aspirations for their community welfare. We test whether videos depicting successful examples of collective action or improved living conditions in rural areas can shape community aspirations and increase cooperation among rural communities in Zambia. The results of a lab in the ﬁeld experiment indicate that compared with the no video condition, unconditional contributions are higher in the video that presents village life while the collective action video does not aﬀect cooperation. When both contributors watch the village life video, conditional contributions are also higher than the control treatment. This result points to the importance of social norms in the evolution of collective action. We ﬁnd that individual aspirations are signiﬁcantly negatively related to the unconditional contribution decision, while community aspirations do not correlate with contribution levels.

The natural resource curse? Empirical evidence from Colombia

María Natalia Cantet, Marcela Ibanez, Juan Carlos Muñoz Mora, Tatiana Orozco, Gerhard Riener, Carlos Adrián Saldarriaga Isaza

We investigate the impacts of gold mining on local socio-economic conditions. Taking Antioquia, Colombia, as a case study, our main research question is whether the expansion of gold mining activities is associated with a decrease in poverty and inequality in the region. We study this question from four main perspectives:
1. The first perspective considers whether gold mining is associated with land use and tenure security changes. Hence we provide evidence on whether gold mining trigger land grabbing (Hausermann et al. 2018).
2. Second, we consider the impact of gold mining on health and examine the effects of gold mining arrival on physical and mental health.
3. The third aspect that we analyze is the impact of economic opportunities in female empowerment. We expand on existing literature and use an innovative economic experiment; we consider whether women lose voice in household income decisions.
4. We investigate whether individuals are willing to reduce adverse environmental effects associated with economic development projects. Using a natural experiment, we investigate participants’ willingness to sign a petition to halt an infrastructure project in a biodiversity hotspot in Colombia.

The costs of betrayal aversion: The case of vanilla production in Madagascar

Marcela Ibanez, Gerhard Riener and Viviana Urueña

This paper provides ﬁeld evidence on betrayal aversion among farmers in rural Madagascar. We show that about 30 percent of the farmers avoid risk more when a person rather than nature determines the outcome. However, we also identify a substantial degree of betrayal neutral and betrayal loving behavior. Betrayal aversion is associated with lower investments in vanilla production, particularly in areas with high criminality. Our ﬁndings show the importance of implementing initiatives that aim at reducing crime.