Periodic Reporting for period 4 - ECOSOCPOL (Social and Political Economics: Theory and Evidence)
Reporting period: 2021-05-01 to 2022-10-31
ECOSOCPOL studies how individual and social motives interact, from micro (individuals), via meso (organizations), to macro (governments). Individual motives change quickly with policy or circumstance, but social motives – in norms, and identities – change slowly. Interacting motives can magnify or dampen responses to changing policies or outside conditions.
Examples from ECOSOCPOL. We study (micro) how interacting ethnic policy favors and social motives altered how 100,000s of mixed-ethnicity couples in China chose their children’s ethnicity; (meso) howinteracting organizational cultures and designs can slow down necessary organizational change; (macro) how interacting green technologies and values may alter damages from escalating pollution.
Examples from ECOSOCPOL. We study (micro) how interacting ethnic policy favors and social motives altered how 100,000s of mixed-ethnicity couples in China chose their children’s ethnicity; (meso) howinteracting organizational cultures and designs can slow down necessary organizational change; (macro) how interacting green technologies and values may alter damages from escalating pollution.
Two subprojects in the initial research plan have been published (or accepted) in leading economics journals. Titles, publication details and main results follow.
1. "Choosing Ethnicity: The Interplay between Individual and Social Motives," Journal of the European Economic Association 19, 1203-48, 2021.
We use Chinese micro data to study how material incentives and social norms shape choices of children’s ethnic identity by mixed-identity couples. Substantially, we show how policies that favor ethnic minorities – as in the proposed model – have very different effects in prefectures with different shares of initial norm breakers. Methodologically, we show how to allow for both complementarity and substitutability of social motivates in empirical work.
2. "Norms, Enforcement, and Tax evasion," forthcoming in Review of Economics and Statistics, accepted for publiction in 2021.
We study interacting material and social motives in a simple model of tax evasion. Social motives drive dynamics like those after the 1990-92 adoption of a poll tax to fund UK local governments. Evidence on evasion dynamics across UK councils is consistent with model predictions.
Early on, ECOSOCPOL was reoriented from three planned subprojects to other aspects of individual vs. social motives. These concern how values/social identities interact with strategic choices. Seven subprojects all rely on similar modeling strategies, and allow a complete characterization, not just of short-term outcomes, but of dynamics/long-run outcomes. This gives a range of new insights and testable predictions.
Four new subprojects are published (or accepted) in leading economics journals, two are published in other (peer-reviewed) venues, and one remains unpublished. Titles, publication details and main results follow.
3. "Democratic Values and Institutions," American Economic Review Insights 1, 59-76, 2019.
We model interacting democratic values and institutions. The share of people holding values to protect democracy evolves endogenously over time, and this makes democratic institutions persist. We unify ideas in distinct sociological and economic literatures, explain observed democratic values and institutions, and suggest new drivers of heterogeneous values.
4. "The Dynamics of Environmental Politics and Values," Journal of the European Economic Association 17, 993-1024, 2019.
Studying environmentalism as social identities with certain values, we show how environmentalist shares coevolve with emission taxes decided in electoral competition, While the resulting policies and values may protect society against pollution damages, they may fail to maximize long-run well-being.
5. "Culture, Institutions, and Policy," Ch. 15 in Bisin, A. and G. Federico (eds.), Handbook of Historical Economics, Elsevier, 2021.
We see culture as a system of values and institutions as formalized rules for politics. To review theoretical and empirical research, we gradually extend a simple model of political agency with new links and feedbacks between culture and institutions.
6. "Science as Civil Society: Implications for a Green Transition," in Akcigit, U. and J. van Reenen (eds.), The Economics of Creative Destruction, Harvard University Press, in press 2022.
We study motivated scientists in a simple model, where innovation is directed towards green or brown sectors and determines the relative growth rate for green goods. Combining innovation dynamics and cultural dynamics among consumers, motivated science can speed up the adoption of green technologies.
7. "Organizational Dynamics: Culture, Design, and Performance," forthcoming in Journal of Law, Economics & Organization, accepted for publication 2022.
We examine the two-way interplay of organization design and organization culture, seen as social identities among workplace groups. We show how a strong culture can be both a virtue and a vice, and apply the model insights to debates about organizational design, performance and culture.
8. "The Political Economics of Green Transitions," forthcoming in Quarterly Journal of Economics, accepted for publication 2022.
We study green transitions, departing from the common economics approach. Consumption transitions reflect not just changing prices and taxes, but changing values which can interact with technologies to help or hinder a green production transition. Policymakers are subject to regular elections and cannot commit to future policy paths. Market failures and government failures together can prevent green transitions, or make ongoing green transitions too slow.
9. ”The Origins of Policy Cleavages: Values, Education and Politics,” manuscript.
Traditional models of politics focus on social class. But other policy issues, which may cut across class cleavages, come and go. We propose a workable model of multi-dimensional politics to explore when, and by which parties, such issues are brought into mainstream politics. We use the framework to shed light on the resurgence of nationalism, and the attention to environmentalism
I devoted my Munich Lectures in November 2018 to this new research. Later on, Tim Besley and I will complete a monograph on this theme for MIT Press. The rationale for the book is that the same general idea help us shed light on ver different, little-understood issues. Work on the book is well underway.
ECOSOCPOL has supported my own research throughout. In its last year, it also supported David Scönholzer, Assistant Professor, IIES, to study how rules for financing school investments in the US help shape local student achievements and the propensity to live in school neighborhoods. Title and main results follow.
10. “School Capital Expenditure Rules, Student Outcomes, and Real Estate Capitalization,” manuscript, 2022.
US school investments are primarily financed by local bonds issued by school districts, but estimated investment effects from different states and districts do not agree. New data for dozens of US states allow us to causally estimate how capital investments shape student achievements and house prices, and show how local and state traits drive effect sizes. A probabilistic voting model of school-district choice is used to evaluate the influence of existing majority requirements and state contributions, as well as counterfactual political and fiscal institutions, for school-capital finance.
1. "Choosing Ethnicity: The Interplay between Individual and Social Motives," Journal of the European Economic Association 19, 1203-48, 2021.
We use Chinese micro data to study how material incentives and social norms shape choices of children’s ethnic identity by mixed-identity couples. Substantially, we show how policies that favor ethnic minorities – as in the proposed model – have very different effects in prefectures with different shares of initial norm breakers. Methodologically, we show how to allow for both complementarity and substitutability of social motivates in empirical work.
2. "Norms, Enforcement, and Tax evasion," forthcoming in Review of Economics and Statistics, accepted for publiction in 2021.
We study interacting material and social motives in a simple model of tax evasion. Social motives drive dynamics like those after the 1990-92 adoption of a poll tax to fund UK local governments. Evidence on evasion dynamics across UK councils is consistent with model predictions.
Early on, ECOSOCPOL was reoriented from three planned subprojects to other aspects of individual vs. social motives. These concern how values/social identities interact with strategic choices. Seven subprojects all rely on similar modeling strategies, and allow a complete characterization, not just of short-term outcomes, but of dynamics/long-run outcomes. This gives a range of new insights and testable predictions.
Four new subprojects are published (or accepted) in leading economics journals, two are published in other (peer-reviewed) venues, and one remains unpublished. Titles, publication details and main results follow.
3. "Democratic Values and Institutions," American Economic Review Insights 1, 59-76, 2019.
We model interacting democratic values and institutions. The share of people holding values to protect democracy evolves endogenously over time, and this makes democratic institutions persist. We unify ideas in distinct sociological and economic literatures, explain observed democratic values and institutions, and suggest new drivers of heterogeneous values.
4. "The Dynamics of Environmental Politics and Values," Journal of the European Economic Association 17, 993-1024, 2019.
Studying environmentalism as social identities with certain values, we show how environmentalist shares coevolve with emission taxes decided in electoral competition, While the resulting policies and values may protect society against pollution damages, they may fail to maximize long-run well-being.
5. "Culture, Institutions, and Policy," Ch. 15 in Bisin, A. and G. Federico (eds.), Handbook of Historical Economics, Elsevier, 2021.
We see culture as a system of values and institutions as formalized rules for politics. To review theoretical and empirical research, we gradually extend a simple model of political agency with new links and feedbacks between culture and institutions.
6. "Science as Civil Society: Implications for a Green Transition," in Akcigit, U. and J. van Reenen (eds.), The Economics of Creative Destruction, Harvard University Press, in press 2022.
We study motivated scientists in a simple model, where innovation is directed towards green or brown sectors and determines the relative growth rate for green goods. Combining innovation dynamics and cultural dynamics among consumers, motivated science can speed up the adoption of green technologies.
7. "Organizational Dynamics: Culture, Design, and Performance," forthcoming in Journal of Law, Economics & Organization, accepted for publication 2022.
We examine the two-way interplay of organization design and organization culture, seen as social identities among workplace groups. We show how a strong culture can be both a virtue and a vice, and apply the model insights to debates about organizational design, performance and culture.
8. "The Political Economics of Green Transitions," forthcoming in Quarterly Journal of Economics, accepted for publication 2022.
We study green transitions, departing from the common economics approach. Consumption transitions reflect not just changing prices and taxes, but changing values which can interact with technologies to help or hinder a green production transition. Policymakers are subject to regular elections and cannot commit to future policy paths. Market failures and government failures together can prevent green transitions, or make ongoing green transitions too slow.
9. ”The Origins of Policy Cleavages: Values, Education and Politics,” manuscript.
Traditional models of politics focus on social class. But other policy issues, which may cut across class cleavages, come and go. We propose a workable model of multi-dimensional politics to explore when, and by which parties, such issues are brought into mainstream politics. We use the framework to shed light on the resurgence of nationalism, and the attention to environmentalism
I devoted my Munich Lectures in November 2018 to this new research. Later on, Tim Besley and I will complete a monograph on this theme for MIT Press. The rationale for the book is that the same general idea help us shed light on ver different, little-understood issues. Work on the book is well underway.
ECOSOCPOL has supported my own research throughout. In its last year, it also supported David Scönholzer, Assistant Professor, IIES, to study how rules for financing school investments in the US help shape local student achievements and the propensity to live in school neighborhoods. Title and main results follow.
10. “School Capital Expenditure Rules, Student Outcomes, and Real Estate Capitalization,” manuscript, 2022.
US school investments are primarily financed by local bonds issued by school districts, but estimated investment effects from different states and districts do not agree. New data for dozens of US states allow us to causally estimate how capital investments shape student achievements and house prices, and show how local and state traits drive effect sizes. A probabilistic voting model of school-district choice is used to evaluate the influence of existing majority requirements and state contributions, as well as counterfactual political and fiscal institutions, for school-capital finance.
The new research and methods in ECOSOCPOL are truly interdisciplinary, drawing on insights from social sciences outside economics: political science, business economics, sociology, social psychology, and anthropology. I and my co-authors have presented the new work to mixed audiences, with large shares of other social scientists.