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Application of Behavioral Economics to Asia

Paper Session

Saturday, Jan. 5, 2019 8:00 AM - 10:00 AM

Hilton Atlanta, 223
Hosted By: American Committee on Asian Economic Studies & American Economic Association
  • Chair: Calla Wiemer, American Committee on Asian Economic Studies

Motivations for Prosocial Behavior: Evidence from Disaster Survivors in the Philippines

Yasuyuki Sawada
,
Asian Development Bank
Yasuke Kuroishi
,
London School of Economics

Abstract

In this paper, we employ carefully-designed field experimental data from a Filipino village affected by strong floods in 2012 on prosocial behavior from incentivized dictator game together with accurate damage information from the satellite images in order to investigate motivations behind seemingly prosocial behavior. There are three main findings of our analysis. First, since a sender tends to transfer more money for a person who encounters large endowment losses than those who do not face losses, we empirically support the model w pure altruism. Second, the results on own damages only weakly support a theoretical prediction, possibly because of differences in endowment damage values. Finally, as a byproduct, our estimation result is consistent with the additive separability assumption of the quadratic or quasiliner utility function. Since informal transfers are motivated by altruism according to our findings, informal insurance network is likely to amend market failures. When a potential recipient of transfers encounters unexpected losses by a natural disaster, donors in the village will likely to increase their transfers. As a general implication of our findings, community enforcement mechanisms in providing informal transfers are supposed to fill the gaps regarding market failures, at least partially. While there are several market and non-market insurance mechanisms available for people to diversify the potential damages caused by disasters and to maintain their livelihood according to consumption and production decisions, complementarities between the market and community mechanisms may have been playing a critical role in Asian villages.

The Impact of Media Campaigns on Tax Filing: Quasi-Experimental Evidence from Pakistan

Antonios M. Koumpias
,
University of Michigan-Dearborn
Jorge Martinez-Vazquez
,
Georgia State University

Abstract

This paper examines the effect of mass media campaigns on income tax filing using survey data from Pakistan. We use information collected before and after a communication campaign shortly after the 2013-2014 tax filing deadline by Pakistan’s Federal Board of Revenue. We use an inverse-probability-weighted regression adjustment estimator to construct comparable treatment and control groups in terms of media exposure and control for predictors of income tax filing. We find that respondents’ likelihood of income tax filing significantly increased in response to exposure to newspaper advertisements of information provision surrounding tax eligibility but not those concerning the tax filing deadline, or the benefits associated with tax filing in the form of non-application of financial penalties. TV advertisements that relied on moral suasion and were solely portraying self-employed taxpayers did not significantly improve tax filing for the entire survey population but were effective among the self-employed. This highlights the importance of both the content of the message as well as the implementation of targeted media campaigns by a tax administration to enhance income tax filing.

Promise Keeping under the Shadow of Confucius

Hsi-Wei Wang
,
National Taiwan University
Joseph Tao-yi Wang
,
National Taiwan University

Abstract

We investigate whether Confucian cultural factors (both past exposure and agreeing with its value) influence Taiwanese people’s promise-keeping and trusting decisions by priming Confucianism on Taiwanese college students. The results show that people are less likely to make (bare) promises and believe in others’ (bare) promises when primed their Confucianism background. On the other hand, people who have more past exposure to Confucianism (self-reported in a post-experimental Confucius background survey) are more likely to keep their promises if Confucianism primed, while those who merely claim to adhere to Confucian values are not. This points to different paths that lead to a social identity that is seemingly the same, but actually diverse.

Benefiting from Our Biases: Inducing Saving Increases among Thai Military Officers

Phumsith Mahasuweerachai
,
Khon Kaen University
Anucha Mahariwirasami
,
Royal Thai Army

Abstract

Saving is the principal source of fund for most people after retirement. Saving too little today means lower quality of life after retirement. Most people know saving is important, but few succeed in saving enough. In this study, we conduct a field experiment using concepts from the well-known Save More Tomorrow™ program to enhance saving among military officers in the Royal Thai Army. Subjects in a treatment group are automatically enrolled to the program unless they opt out, and the source of saving increases only come from increases in their future salary. The initial findings from the implementation suggest a high chance of success in increasing saving. The majority of the subjects in the treatment group (98 percent) remain in the program after two pay raises, and their saving rate is going up. On the other hand, saving rate of subjects in control group is continuing to decline even their salary is also on average evenly increased. Our study serves as further evidence that insights from behavioral economics are vital as a policy tool, and that they are widely applicable even across cultural settings, as these primary results have shown.
Discussant(s)
Anna Lou Abatayo
,
Bocconi University
Reid Click
,
George Washington University
Jie Zheng
,
Tsinghua University
Charles Schnitzlein
,
University of Vermont
JEL Classifications
  • D9 - Micro-Based Behavioral Economics
  • O5 - Economywide Country Studies