Essays in Applied Microeconomics

Abstract

This thesis consists of three essays that study the distribution of individual preferences, how they shape social interactions and translate into collective outcomes, and how they interact with the decision environment to determine individual behaviour. <br /> Chapter 1 (“Inherited Inequality and the Dilemma of Meritocracy”) is concerned with fairness preferences in situations where individuals differentially profit from other people’s efforts. For individuals who prefer resource distributions that reflect individual merits, such situations may pose a dilemma: beneficiaries have merited equal amounts of resources – which calls for redistribution – but benefactors may have merited to pass on differential amounts of resources to a person of their choice – which provides a justification for inequality. To study how individuals deal with this dilemma, we conducted a survey experiment with a representative sample of US citizens. In the context of our experiment, the vast majority of individuals accept inherited inequality as long as it is based on benefactors’ unequal merits. While future research will need to tease out the limits of this result, it may help to explain common opposition against redistributive policies. <br /> Chapter 2 (“Prosociality predicts individual behavior and collective outcomes in the COVID-19 pandemic”) examines the role of prosociality – i.e., the willingness to behave in a way that mostly benefits other people - and collective action in the context of the COVID-19 pandemic. Because more prosocial individuals may more thoroughly internalize how their behaviour affects other people, they may be more willing to engage in preventive health behaviours and reduce the spread of the virus. To investigate this hypothesis, we combine various data sources including a nationally representative online survey of German citizens. At the individual level, higher prosociality is strongly positively related to compliance with public health behaviours such as mask-wearing and social distancing. At the regional level, a higher average prosociality is associated with significantly lower weekly incidence and case growth rates, controlling for a host of demographic and socio-economic factors. These associations are driven by higher compliance with public health behaviours in regions with higher prosociality. Our correlational results thus support the common notion that voluntary behavioural change plays a vital role in fighting the pandemic and, more generally, that social preferences may determine collective action outcomes of a society. <br /> Finally, Chapter 3 (“The Effect of Task (Mis)Matching and Self-Selection on Intrinsic Motivation and Performance”) is concerned with work environments and how they interact with individual preferences over features of that environment to determine performance. We focus on a core aspect of work environments—namely, which task individuals work on—and study whether the (mis)match between tasks and workers’ task preferences affects their performance. Further, we test whether there is a direct motivational effect of self-selection. In the context of a real-effort online experiment, we find that subjects who either self-select a task or are assigned their preferred task produce about 50% more output than subjects who are assigned their non-preferred task. In summary, the results suggest that workers’ performance depends crucially on whether they work on their preferred task, but not so much on whether that task is self-selected or assigned.