Income Effects on Socially Responsible Market Behavior

Economics

Speaker:Vanessa Valero, University of Zurich
Date: Wednesday 30 November 2016
Time: 13.30
Location: Streatham Court B

Further details

This paper examines whether economic development, in the form of higher income levels, causally affects concern for the social impact of market behavior. That is, is social responsibility a “normal good,” whose consumption increases with income? To address the causal impact of income growth, we extend the experimental market paradigm developed in Bartling et al. (QJE, 2015), in which firms and consumers exchange products that differ in their social impact, with products that mitigate a greater degree of an externality imposed on third parties also costing more to produce. We vary, by treatment condition, the income level of consumers to determine its causal impact on socially responsible behavior. We find that market social responsibility, in absolute terms, does not increase when consumers are richer. This result contrasts with non-market games, such as the dictator game, in which the absolute level of pro-social behavior increases with income.