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Morality and Economics

Paper Session

Sunday, Jan. 7, 2018 8:00 AM - 10:00 AM

Pennsylvania Convention Center, 202-B
Hosted By: American Economic Association
  • Chair: Jörgen Weibull, Stockholm School of Economics and Institute for Advanced Study in Toulouse

Torn Between Three Motives

Eric van Damme
Tilburg University
Siegwart Lindenberg
University of Groningen


Standard economics takes preferences to be exogenous, but allows for people to be of different types. Experiments, however, show that the same person's behavior may differ depending on the circumstances or the environment. We propose and analyse a model in which individuals are torn between three motives: hedonic ( the person is governed by the feelings of the moment), gain (the more forward looking desire to increase resources) and the normative motive to do things that are good for the group. The motives correspond to different mind sets. Which motive is salient depends on the social environment including the actions taken by others. Importantly, the normative motive is weak and tends to be displaced. We provide testable implications of the model and show that it can explain many diverse phenomena that are difficult to explain otherwise.

Malleability of Moral Behavior

Armin Falk
Behavior and Inequality Research Institute


I will present results from two papers on malleability of moral behavior. Both papers use an electric shock paradigm to study the moral trade-off between selfish motives (earning money) and inflicting pain (an immoral decision). The first studies the role of self-image. Here we exogenously vary self-image concerns in manipulating self-directed attention. We find that the exogenous increase in self-image concerns significantly reduces the fraction of subjects inflicting pain. The second study shows that exogenously imposed status differences (in terms of sexual attractiveness) affect moral behavior. Subjects facing either a high or low status other are more likely to inflict pain relative to facing equal status others. These findings shed light on the potentially detrimental effects of societal inequality on violence and social cohesion.

Morality as the Glue of Society

Kaushik Basu
Cornell University


The fact that self-interest, via the invisible hand, can lead to collective well-being is such a surprising and interesting result that that became a central proposition of economics ever since Adam Smith’s seminal work. What got overlooked is that morality is the essential glue that holds society together and enables self-interest to drive growth and markets to function. In reality, human beings can do much more than choose points from budget sets—the setting in which the Fundamental Theorems of Welfare were established. Once we allow for this larger and more realistic feasible set, it becomes impossible to have third-party monitoring of behavior. The only way to prevent cheating from threatening the very basis of markets is self-monitoring and that is where morality comes in. Human society would not have reached the advanced stage it has if it were not for our innate morality, which has survived long periods of evolution. It will be shown that as society gets more complex, the need for the glue of morality to hold society together will get greater. The way the challenge of climate change has made us realize that we have to devise collective action strategies to supplement the market, the increasing complexity of our economic life will necessitate a more systematic analysis of the role of morality and strategies to nurture it.

Morality: Evolutionary Foundations, Experimental Evidence, and Economic Implications

Ingela Alger
Toulouse School of Economics and Institute for Advanced Study in Toulouse
Jörgen Weibull
Stockholm School of Economics and Institute for Advanced Study in Toulouse


Since the publication of Adam Smith’s Wealth of Nations, it has
been customary among economists to presume that economic agents are purely self-
interested. However, research in experimental and behavioral economics has shown that
human motivation is more complex and that observed behavior is often better explained
by additional motivational factors such as a concern for fairness, social welfare etc. As a
complement to that body of work we have carried out theoretical investigations into the
evolutionary foundations of human motivation (Alger andWeibull 2013, 2016). We found
that natural selection, in starkly simpli…ed but mathematically well-structured environ-
ments, favors preferences that combine self-interest with morality. Roughly speaking,
the moral component evaluates one’s own action in terms of what would happen, if, hy-
pothetically, this action were adopted by others. Such moral preferences have important
implications for economic behavior. They motivate individuals to contribute to public
goods, to give fair offers when they could get away with cheap offers, and to contribute
to social institutions and act in environmentally friendly ways even if their individual
impact is negligible. We present experimental evidence on the explanatory power of homo moralis preferences in standard economic games.
JEL Classifications
  • A1 - General Economics
  • D6 - Welfare Economics