Research

Abstract: 

Received wisdom holds that income rank matters for life satisfaction. In much of the literature, however, income comparisons are limited to the national population and evidence is correlational. In this paper, we investigate differences in the causal effects of rank information across reference groups. In a representative sample of mid-career Finns, we randomize individuals to receive personal rank information about educational, municipal, occupational, or age reference groups, and compare the effects, for a set of alternative welfare measures, to the standard national reference group and to a control group that receives no information. We also characterize the accuracy of rank beliefs across groups. Our data, which integrates experimental and register data, finds that rank information causes differences in satisfaction with disposable income, perceived fairness of own income, and wage satisfaction, but not life satisfaction. We also find substantial variation in the effects across reference groups, with those for the national reference group both weak and insignificant.

Abstract: 

In a large online probability based panel of the general population of Norway, we examine the effect that varying delays in uncertainty revelation have on risk taking on behalf of others. We find a precisely estimated null effect of revelation delay on the average proportion that chose a lottery over a safe alternative. Estimating a hierarchical Bayes model of rank dependent utility, we find some differences in how decisions are made, the median participant does become more risk seeking with long delays, but this effect is offset by differences in the role of heterogeneities within treatment.

Abstract: 

Social assistance is often thought of as an insurance scheme, allowing citizens to take more risk than they would in autarky. Provision of social assistance also involves uncertainty since providers have incomplete information and cannot fully predict future outcomes. Societies organize provision of social assistance in different ways, and we know little about how this influences the willingness of providers to decide under uncertainty about assistance outcomes. In a stylized experiment, I investigate how two different institutions affect risk taking in provision. In one institution, everyone is entitled to social assistance and decisions are made with given money. In the other institution, assistance is voluntarily given and not guaranteed. In the latter institution, providers of social assistance take 22% of a standard deviation more risk on behalf of others and only 48% receive assistance. The experimental design allows me to decompose this difference into a selection effect and an effect of the institution itself. The voluntary institution leads to greater risk taking, but this effect is counteracted by selection of cautious volunteers.

Abstract: 

We invited a representative sample of mid-career Finns to participate in a pre-registered online survey, we elicited their beliefs about their income ranks in each of the five reference groups: educational, municipal, occupational, and age groups. The participants then chose the income rank that they most wanted know. We find the preferences for the reference groups are starkly different: most chose to see their rank in occupational group and least to see their national rank. Complementing the survey data with administrative data, we find the choice of reference group is related to demographic characteristics (occupation, residence, gender, etc.). Compared to a control group of no rank information, we find that the endogenous rank information causes differences in individual well-being.

Abstract: 

Social capital, as defined by Putman (1967), is the features of social organization, such as trust, norms and networks that can improve the efficiency of society by facilitating coordinated actions. We investigated the effects of income rank on social capital with the data collected in a large-scale survey with a representative sample of mid-career Finns to participate in a pre-registered online survey, we elicited their beliefs about their income ranks in each of the five reference groups: educational, municipal, occupational, and age groups. The participants then was shown their income rank randomly in one reference group. After the revelation of an income rank, the participants answered questions regarding just world beliefs, trust in public agencies and social preferences. We find that income rank of occupational group causes changes in beliefs in equal opportunities in education and job and trust in public agencies.

Plan: 

Inspired by the predication of the model of Ellingsen and Miettinen (2014), in a bilateral bargaining on how to share a total pie, the player who can adjust her offer less frequently has a strategic advantage and should receive a larger share of the pie. We pre-registered and ran a laboratory experiment where two players finished a sliding task individually and played a real-time bargaining game on how to distribute the total earning from the task. We varied the arrival chance of the opportunity to adjust the offer (loophole rate, high and low) between the two players (contribution to the total, high and low). With the observed final deal and procedural behavior, we will examine whether the final division is more equal when the high contributor has higher loophole rate, whether the player with high loophole rate concedes more, and how the procedural behavior is related to demographical characteristics. 

Plan: 

With an experiment, we plan to investigate the saving behavior and ethical concerns under different pension schemes: autonomy, within-cohort, and between-cohort. The pension scheme differs between countries. It is always hard to compare one country to another for many confounders and it is also socially costly to examine the effects of pension schemes by adopting and comparing different schemes in a society. In the project, we aim to understand the behavioral responses and ethical views toward different pension schemes.

Plan: 

In a field experiment with a representative sample, we will study the effects of relative standing of income on different social behaviors, i.e., altruism, trust and cooperation.

Plan: 

We will study how individuals perceive and learn about complex pricing schedules by exploiting two exceptional features of the Finnish context. On one hand, the Finnish income-based punishment system creates very large discrete jumps in the size of speeding tickets. Standard economic theory predicts that drivers should react to these cutoffs by slowing down and bunching below the fine jumps. On the other, however, evidence from Finland suggests that individuals fail to react to these fine cutoffs as standard models predict. To understand, we will conduct an RCT with representative sample of Finns to manifest their perception about the punishment scheme and explore whether correcting the misperception, if any, changes their driving behavior (i.e., reducing speeding).