Negative economic shocks and the compliance to social norms

Bogliacino, F.,  et al. (2024).

Judgment and Decision Making, 19.

https://doi.org/10.1017/jdm.2024.1

Abstract

We study why suffering a negative economic shock, i.e., a significant loss, may trigger a change in other-regarding behavior. We conjecture that people trade off concern for money with a conditional preference to follow social norms and that suffering a shock makes extrinsic motivation more salient, leading to more norm violation. This hypothesis is grounded on the premise that preferences are norm-dependent. We study this question experimentally: after administering losses on the earnings from a real-effort task, we analyze choices in prosocial and antisocial settings. To derive our predictions, we elicit social norms for each context analyzed in the experiments. We find evidence that shock increases deviations from norms.

The research is linked above.

Here are some thoughts.

The research indicates another way in which moral norms shift based on context. The study investigates how experiencing significant financial losses, termed negative economic shocks (NES), influences individuals' adherence to social norms. The authors hypothesize that when individuals face NES, they become more focused on monetary concerns, leading to a higher likelihood of violating social norms. This hypothesis is grounded in the concept of norm-dependent utility, where individuals weigh the psychological costs of deviating from norms against their financial needs. The researchers conducted three experiments where participants experienced an 80% loss in earnings from a real-effort task and subsequently engaged in various tasks measuring norm compliance, including stealing, cheating, and cooperation.

The findings reveal that participants who experienced NES exhibited increased norm violations across several contexts. Specifically, there was a notable rise in stealing behaviors and a significant increase in cheating during the "die-under-the-cup" task. Additionally, the study found that retaliation behaviors decreased markedly in "joy of destruction" scenarios. Importantly, the results suggest that the effects of NES on social behavior are distinct from mere wealth effects, indicating that experiencing a shock alters individuals' motivations and decision-making processes. Overall, this research contributes valuable insights into the complex interplay between economic stressors and social behavior, highlighting how financial adversity can lead to deviations from established social norms.

Social proximity and the erosion of norm compliance

Bicchieri, C., Dimant, E., et al.

Games and Economic Behavior

Volume 132, March 2022, Pages 59-72

Abstract

We study how compliance with norms of pro-social behavior is influenced by peers' compliance in a dynamic and non-strategic experimental setting. We show that social proximity among peers is a crucial determinant of the effect. Without social proximity, norm compliance erodes swiftly because participants only conform to observed norm violations while ignoring norm compliance. With social proximity, participants conform to both types of observed behaviors, thus halting the erosion of compliance. Our findings stress the importance of the broader social context for norm compliance and show that, even in the absence of social sanctions, norm compliance can be sustained in repeated interactions, provided there is group identification, as is the case in many natural and online environments.

From the Discussion and conclusion

Social norms are a fundamental component of social and economic life. Therefore, it is important to study conditions under which norm compliance occurs. In this paper, we focused on how observing others' behavior influences individual norm compliance. To investigate this, we designed a non-strategic Take-or-Give (ToG) donation game where people could give to charity, take from it, or abstain from changing the initial allocation between the self and the charity. Using a series of norm-elicitation experiments, we established that most people think taking from the charity is socially inappropriate, whereas abstaining or giving to the charity is appropriate. We then examined the effect of letting individuals observe each other's behavior in a repeated version of the ToG game. Our behavioral results reveal a notable asymmetry in the effect of observing peer behavior: observing other anonymous individuals violating the norm (taking from charity) increased the likelihood that the observers transgress as well. Observing that others donate to charity, however, did not increase donations to the charity. In sum, observing socially inappropriate behavior by anonymous people eroded norm compliance in a way that was not compensated by observing socially appropriate behavior. Our additional experiments show that this partly occurs because observing inappropriate behavior erodes the social norm of giving.

While this asymmetry in reactions paints a bleak picture for norm compliance when other anonymous people can be observed, in most real-world interactions individuals can observe their social proximity to the people they interact with. Assessing similarities with others may bring forth a mechanism of group identification that may promote symmetrical behavioral conformity within the group. The reason for this phenomenon is that the individual may feel that deviations from group behavior, whether positive or negative, signal a lack of commitment to the group. Individuals fear that this may trigger disapproval by other group members. Thus, they will be more vigilant — and responsive — to both examples of socially inappropriate and socially appropriate behavior. 

The research is here.