Three experiments on discrimination, inequality, and vulnerability
Final Report Abstract
The proposed research project focused on two key topics that have shaped my work: discrimination, and poverty and vulnerability. I contributed to both topics. First, on the topic of discrimination or group identity in general, one study (conditionally accepted in the "Journal of Public Economics") builds on a premise that cooperation is more difficult across ethnic boundaries, preventing economic integration. Using an experiment in Afghanistan, we show how the ability to impose financial penalties helps to overcome this. We find that when an option to impose a financial sanction on non-compliers in a trust game is missing, subjects are more trustworthy towards co-ethnics. When the fine is imposed by a co-ethnic, it has little effect. However, in cross-ethnic interactions, the fine increases trustworthiness, virtually eliminating in-group bias. Institutions for enforcing cooperation are more effective when applied between ethnic groups, due to behavioral differences in how individuals respond to pecuniary sanctions. Second, minority groups face a range of barriers in access to markets. Another study is motivated by substantial underrepresentation of minorities in advisory positions. In an online experiment with a US sample we study whether this underrepresentation is driven by discriminative behavior of advice seekers. Subjects face a real effort task that is difficult to solve without expert advice. We offer subjects the option to watch a tutorial before working on the task. The main treatment variation is the race of the advisor, signaled by the skin color of a hand appearing at the beginning of the tutorial. We analyze how subjects’ willingness to pay for advice depends on the race of the advisor, and how the race of the advisor affects advice utilization. We find no support for discrimination on either demand for advice, nor on advice utilization and performance. Despite successful treatment manipulation, the null effect is precise and holds across various demographic groups. Third, group specific utilities generate differences in market outcomes. Further experimental study shows that while women are less willing to enter competitive tournaments, the key reason is not a specific competitiveness trait, but rather gender differences in risk preferences and overconfidence. We test this using novel non-parametric methods that do not suffer from issues prevalent in earlier literature. The results matter for decision making theory. Fourth, discrimination is a dynamic phenomenon. In a new study we document a concern that adverse health shocks increase hostility towards outgroups. In an experiment manipulating the salience of Covid-19 related concerns we document causal effects on hostility towards foreigners using a novel incentivized measure of hostility. Our findings suggest that rebuilding social ties across national borders is a pre-condition to re-establishing cooperation at a global level. Fifth, turning to the issues of inequality and vulnerability, another study documents that exogenously manipulated concerns related to poverty make Ugandan farmers behave more impatiently. We document this using a task not confounded by liquidity constraints. We show that the effect is driven by increased costs of self-control. Our findings show that poverty itself affects behavior through psychological channels and not merely through liquidity constraints as mainstream economic models would suggest. The paper is conditionally accepted in "The Economic Journal". Sixth, unequal bargaining power in labor market contracts may result in worker exploitation. Costly legal reforms are typically used as a remedy. In another study we test a simple intervention inspired by insights from social psychology and research on social preferences. In a field experiment with Filipino domestic workers departing to Hong Kong and Saudi Arabia, we find that workers who give their prospective employers a small gift and show them a photo of their family are treated better and intend to prolong their contracts. Using an online experiment, we document that this effect is driven by increased prosociality through reduced social distance. The cost-effective intervention may complement costly legal reforms in improving worker welfare. Lastly, I worked on two more related studies. First, a field experiment with Ugandan university students, a sample with potential of creating profitable enterprises, examining selection into and effects of an entrepreneurship academy. Second, a policy relevant new panel study examining effects of the Covid-19 on mental health. This study sparked public debate in the Czech Republic and inspired future work aimed at reduction of intergenerational conflict through information provision.
Publications
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(2020). “Covid-19 Crisis Fuels Hostility against Foreigners.” IZA Discussion Paper #13250
Bartoš, V., M. Bauer, J. Cahlíková, and J. Chytilová
