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ERC

PREFERENCES — Result In Brief

Project ID: 209214
Funded under: FP7-IDEAS-ERC
Country: Germany

The impact of preferences on economic performance

Key economic preferences constitute important building blocks of any economic model – they determine behaviour as well as economic and social outcomes at both individual and societal levels. EU researchers undertook a global study to analyse the distribution, origin, determinants and consequences of human preferences.
The impact of preferences on economic performance
Despite their fundamental importance, there is still limited empirical knowledge regarding the nature of preferences, with crucial questions that remain unanswered. Among others, these pertain to different degrees of risk aversion, influence of personal characteristics, the relation between economic preferences and other non-cognitive skills, whether preferences and attitudes vary according to social and institutional environments, and differences across populations and countries.

The project PREFERENCES (Understanding preferences: Measurement, prevalence, determinants and consequences) focused on four particularly important types of preferences: risk, time, social, and work and leisure.

Related research has broadened our knowledge and understanding of determinants and consequences of economic preferences. The team identified various external factors driving the diversity of preferences, including age, gender, the role of parents and cognitive abilities.

Bridges insights from various disciplines, PREFERENCES' methodology combined lab and field experiments with large-scale survey studies. This enabled researchers to comprehensively evaluate the advantages of tightly controlled environments and large-scale representative data sets.

A major project achievement is the establishment of a global preference map – a country-specific and representative assessment of key economic preferences in 76 nations from more than 80 000 individual observations. This data set allows the study of cross-cultural differences and culturally rooted individual determinants of preferences. It also affords insights into the role of preferences with respect to a country's economic performance.

Preferences have been shown to systematically impact important outcomes such as financial decisions, migration and economic growth (at the societal level). As such, project work has implications for both research and policy.

Related information

Keywords

Preferences, economic performance, economic preferences, cross-cultural differences
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