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Social Preferences: Fundamental Characteristics and Economic Consequences

Author

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  • Ernst Fehr
  • Gary Charness

Abstract

We review the vast literature on social preferences by assessing what is known about their fundamental properties, their distribution in the broader population, and their consequences for important economic and political behaviors. We provide, in particular, an overview of the empirical characteristics of distributional preferences and how they are affected by merit, luck, and concerns for equality of opportunity. In addition, we discuss the evidence for reciprocity and guilt aversion and assess the empirical relevance of self-image and social image concerns in prosocial behaviors. The overall evidence indicates that a large majority of individuals have some sort of social preferences, while purely self-interested subjects are a minority. We also document converging insights from the lab and the field on the impact of wage inequality on work morale, employees' resistance to wage cuts, and the role of social preferences for cooperation and collective action, distributive politics, and individuals' selection into different occupations.

Suggested Citation

  • Ernst Fehr & Gary Charness, 2025. "Social Preferences: Fundamental Characteristics and Economic Consequences," Journal of Economic Literature, American Economic Association, vol. 63(2), pages 440-514, June.
    • Handle: RePEc:aea:jeclit:v:63:y:2025:i:2:p:440-514
    DOI: 10.1257/jel.20241391
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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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