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Date: May 12, 2021

Economic decision making: Why do some children lie and others don’t?

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In a new working paper, Johannes Abeler, Armin Falk and Fabian Kosse investigate whether preferences for honesty are malleable and what determines them. Experimentally measuring preferences for honesty in a sample of children, the authors find that children from families with higher socio-economic status (SES) are more honest.

Reporting private information is a key part of economic decision making. A recent literature has found that many people have a preference for honest reporting, contrary to usual economic assumptions.

Causal effect of the social environment

The study uses data from the briq family panel, an annual survey of 700 families in the Cologne-Bonn region. To assess the causal effect of the social environment, children from low-SES households were randomly enrolled in a year-long mentoring program. The volunteer mentors spend an afternoon per week with the children and engage in interactive social activities such as cooking, playing football, or doing handicraft activities.

The mentoring program thus enriches the social environment of the children and widens their horizon by providing inputs and experiences that are potentially scarce in low-SES families and, at the same time, essential for the development of honesty preferences.

The researchers find that preferences for honesty are indeed malleable and that they can be changed by such an intervention: About four years after the end of the program, mentored children are significantly more honest. The results thus suggest that early-childhood interventions cannot just improve a child’s achievements but also affect their social and moral behavior.

(c) Briq Institute

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