Incentives and Social Norms in Household Behavior
AbstractIn a broad psychological perspective, both economic incentives and social norms may be be regarded as giving rise to purposesful, or ârationalâ behavior. By this I simply mean that individuals act in accordance with expected reward or punishment, even though the form these take differs substantially in the two cases. Whereas economic incentives imply âmaterial rewardsâ, or favors that can be traded for such rewards including leisure, social norms imply âsocial rewardsâ. The latter basically take the form of approval or disapproval from others, and related feelings of pride or shame. Moreover, once a social norm has been internalized in an individualâs own value system, behavior in accordance with, or against, the norm will also result in feelings of self-respect or guilt. All this suggests that not only economic incentives but also social norms may be analyzed by means of utility theory, as will be illustrated below. Many social norms may not have much to do with economic incentives (Elster,1989). In some cases, it is, however, useful to study the interaction between them. Indeed, this is the basic message of the paper. My discussion will be limited to three norms of apparent importance for household behavior: (i) work norms; (ii) norms against wage underbidding; and (iii) saving and consumption norms. Thus, the paper deals with norms concerning willingness to work, ability to get a job and the use of income.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 87 (1997)
Issue (Month): 2 (May)
Other versions of this item:
- D10 - Microeconomics - - Household Behavior - - - General
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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