Welfare State Disincentives with Endogenous Habits and Norms
It is assumed in this paper that habits and social norms constrain the influence of economic disincentives on individual behavior but that these constraints themselves may subsequently be influenced by the very same disincentives. It is also assumed that an individual is more likely to obey such habits and norms if many individuals in society do so. Though such constraints on economic behavior usually recede only gradually in response to changes in economic incentives, it is argued that major macroeconomic shocks may drastically speed up the process (a 'ketchup effect'). These features may generate multiple equilibria and vicious dynamics. Copyright 1995 by The editors of the Scandinavian Journal of Economics.
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| Length: | 24 pages |
| Date of creation: | Oct 1995 |
| Handle: | RePEc:hhs:iuiwop:0441 |
| Contact details of provider: | Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden Phone: +46 8 665 4500 Fax: +46 8 665 4599 Web page: http://www.ifn.se/ Email: More information through EDIRC
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-319, June.
- Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
- Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-1035, December.
- Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
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