Skip to main content

Foundations of Economic Preferences

Final Report Summary - FEP (Foundations of Economic Preferences)

"Foundations of Economic Preferences (FEP)" is an ambitious project that examines the foundations of economic preferences. Preferences represent individual behavioral goals and are a decisive component in almost all economic models. The starting point of this project is that there are still substantial gaps in our understanding of preferences, in particular on the social, economic, and biological factors that shape them. Furthermore, still insufficient knowledge exists about their distribution in society and their relationship to demographic and socio-economic factors. The research conducted in FEP over the last six years provided many new insights into these issues and formed a solid basis for further study in this important area that will continue long after completion of the project.
FEP research made contributions to our understanding of the biological foundations of social norm compliance, the neural encoding and representation of motives, and the effects of pharmacological agents on social preferences. Other research in FEP provided insights into the determinants of preferences towards risk, for honesty, for decision rights, and for leadership. Finally, a major research project using data collection effort yielded a unique data set on the structure of time, risk and social preferences in a large adult sample of the Danish population, enabling us to study the role of preferences for important real life decisions such as savings (and its consequences for wealth inequality), insurance, voting behavior or charitable giving. In work closely related to the study of preferences, we examined the persistence of and possible interventions against harmful social norms such as female genital cutting.
We developed and implemented novel methodologies for studying the association between individuals’ genetic characteristics (SNPs) and their phenotypes, which is a promising avenue for future research. The very large number of single nucleotide polymorphisms (SNP's) that form the basis for a genome wide association study (GWAS) necessitates corrections for multiple hypotheses testing. We were able to develop two methods, one that analyzed all SNP's in a multiple generalized linear model and one that combined machine learning and statistical testing that takes correlation structures within the set of SNP's into account.
The research completed in FEP was highly interdisciplinary, based on studies at the intersection between economics, neuroscience, genetics, psychology, and sociology.
The research started under FEP will continue on a long term basis. We entered into a very fruitful cooperation with researchers at the University of Copenhagen, and expect to analyze data already collected under the FEP and to collect new data in our ongoing study of economic preferences. After completion of our work on female genital cutting in Sudan, we assisted in establishing a new Center for Child Well-being and Development.
Support from the ERC enabled us to develop and complete a very large number of diverse research studies on the foundations of economic preferences. The results of our studies generally exceeded our expectations, and we were able to publish our results in leading economics and general scientific journals.