Politics and development depend not only on resources and formal institutions, but also on intangible, socially produced factors that shape individual and group responses. Examples are political ideology, moral values, and various types of beliefs from the religious to notions of how the world works. BCEP faculty work on these themes and demonstrate when and how they matter, both through theoretical arguments and the use of economic techniques to deliver rigorous empirical measurement.
Two examples of our work are projects in Pakistan and the US.
Case Study Pakistan: Using Financial Incentives to Gauge Anti-American Feeling
Accurately measuring religious or ideological conviction is fraught with difficulty. In polls and surveys, respondents often shade their answers to reflect what they think questioners want to hear. Tracking a person's level of religious or political participation has limitations as well, because people often enjoy benefits from church or party membership that are distinct from their underlying beliefs.
In two separate case studies, one in Pakistan and one in the United States, researchers at the Center for Economics & Politics used financial incentives to overcome those obstacles.
In the Pakistan study, co-authored by Noam Yuchtman, the challenge was to accurately gauge anti-American fervor among young, educated Muslim men. About 1,000 men were asked to complete a standard personality survey. The real experiment, however, came afterward. Participants were offered a "bonus" payment – but only if they checked a box on a form that "gratefully thanked" the U.S. government for its generosity.
The bonus payments ranged from 100 rupees, about one-fifth of the average daily wages, and 500 rupees. About one-quarter of the men turned the money down – a clear indictor of fairly widespread anti-American sentiment. Because the participants were putting a monetary value on not betraying their true feelings, their decisions provided a more reliable indicator of their convictions than what they would have told survey-takers.
Case Study United States: Using Financial Incentives to Gauge Religious Conviction
In the second paper co-authored by Ned Augenblick and Ernesto Dal Bó, researchers used financial incentives to gauge the convictions of Christians who asserted that the Biblical Judgment Day was at hand and that the world would end on May 21, 2011.
The prediction had come from Harold Camping, a Christian radio talk-show host and co- founder of the Family Radio network, and his followers enthusiastically echoed his assertions. On May 21, they predicted, great cataclysms would ravage the earth. The faithful would be saved and ascend to heaven, while the "unsaved" would be annihilated within months.
The researchers, who included Jesse Cunha at the University of California at Santa Cruz and Justin M. Rao of Microsoft Research, surveyed members of Rev. Camping's Bible study group a few weeks before May 21. The researchers also surveyed Seventh Day Adventists, who professed a belief in the apocalypse but explicitly disavowed predictions of a specific date.
The essence of the experiment was to offer respondents a financial choice: Accept a $5 bonus payment on the spot, or accept as much as $500 shortly after May 21. The participants were told that their decisions would be kept confidential.
In economic terms, the experiment measured the "elasticity" of the followers' apocalyptic beliefs by measuring the extent to which they would discount any payments received after May 21. For those who truly believed that the world would end on that day, the later payments would be worthless. For those who harbored unspoken doubts, the prospect of $500 would be tempting.
As it happened, nearly all the Family Radio participants preferred the $5 upfront over the possibility of $500 after the expected apocalypse. By contrast, the Seventh Day Adventists were much more willing to wait for the larger payment.
The experiment indicated that the Family Radio followers believed so strongly in the prophecy that they had almost no interest in hedging their bets. They were almost completely "discounting" the value of money after May 21.
Indeed, many of Camping's followers remained confident after the date passed without incident. In a follow-up, the researchers studied more than 1,500 blog postings by members of the Family Radio group in the days after May 21. Until Camping eventually conceded that he had been wrong, many of the followers simply pushed back the expected date of the apocalypse.