IDEAS home Printed from https://ideas.repec.org/p/hhs/iuiwop/0476.html
   My bibliography  Save this paper

Social Norms and Economic Incentives in the Welfare State

Author

Listed:
  • Lindbeck, Assar

    (Research Institute of Industrial Economics (IFN))

  • Nyberg, Sten

    (Research Institute of Industrial Economics (IFN))

  • Weibull, Jörgen W.

    (Research Institute of Industrial Economics (IFN))

Abstract

This paper analyzes the interplay between social norms and economic incentives in the context of work decisions in the modern welfare state. We assume that to live off one's own work is a social norm, and that the larger the population fraction adhering to this norm, the more intensely it is felt by the individual. Individuals face two choices, one economic, whether to work or live off public transfers, and one political, how large the transfer should be. The model highlights certain factors determining the size of the welfare state.

Suggested Citation

  • Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series 476, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0476
    as

    Download full text from publisher

    File URL: https://www.ifn.se/wfiles/wp/wp476.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lindbeck, A & Nyberg, S & Weibull, J-W, 1996. "Social Norms, the Welfare State, and Voting," Papers 608, Stockholm - International Economic Studies.
    2. Basu, Kaushik, 1987. "Monopoly, quality uncertainty and 'status' goods," International Journal of Industrial Organization, Elsevier, vol. 5(4), pages 435-446.
    3. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-1035, December.
    4. Becker, Gary S, 1991. "A Note on Restaurant Pricing and Other Examples of Social Influences on Price," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1109-1116, October.
    5. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-877, October.
    6. Lindbeck, A., 1994. "Welfare State Disincentives with Endogenous Habits and Norms," Papers 589, Stockholm - International Economic Studies.
    7. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
    8. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, vol. 8(3), pages 329-340, December.
    9. Blomquist, N. Soren, 1993. "Interdependent behavior and the effect of taxes," Journal of Public Economics, Elsevier, vol. 51(2), pages 211-218, June.
    10. Sundén, David & Weibull, Jörgen W., 1997. "A Note on Social Norms and Transfers," Working Paper Series 478, Research Institute of Industrial Economics.
    11. Granovetter, Mark & Soong, Roland, 1986. "Threshold models of interpersonal effects in consumer demand," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 83-99, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kim, Youngse, 2003. "Income distribution and equilibrium multiplicity in a stigma-based model of tax evasion," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1591-1616, August.
    2. Adrian Chadi, 2012. "Employed But Still Unhappy? On the Relevance of the Social Work Norm," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(1), pages 1-26.
    3. Thomas J. Nechyba, 2001. "Social Approval, Values, and AFDC: A Reexamination of the Illegitimacy Debate," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 637-666, June.
    4. Lindbeck, Assar, 1997. "Incentives and Social Norms in Household Behavior," American Economic Review, American Economic Association, vol. 87(2), pages 370-377, May.
    5. Dirk Sliwka, 2007. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," American Economic Review, American Economic Association, vol. 97(3), pages 999-1012, June.
    6. Fahr, René, 2006. "The Wage Effects of Social Norms: Evidence of Deviations from Peers’ Body-Mass in Europe," IZA Discussion Papers 2323, Institute of Labor Economics (IZA).
    7. Fehr, Ernst & Falk, Armin, 2002. "Psychological foundations of incentives," European Economic Review, Elsevier, vol. 46(4-5), pages 687-724, May.
    8. Kiminori Matsuyama, 1991. "Custom Versus Fashion: Path-Dependence and Limit Cycles in a Random Matching Game," Discussion Papers 1030, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2001. "Social Norms and Optimal Incentives in Firms," Working Paper Series 565, Research Institute of Industrial Economics.
    10. Edward J. Bird, "undated". "Welfare Policy and Endogenous Selective Norms," Wallis Working Papers WP11, University of Rochester - Wallis Institute of Political Economy.
    11. Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2012. "Social norms and economic incentives in firms," Journal of Economic Behavior & Organization, Elsevier, vol. 83(2), pages 173-185.
    12. Mirta Gordon & Jean-Pierre Nadal & Denis Phan & Viktoriya Semeshenko, 2012. "Discrete Choices under Social Influence: Generic Properties," Post-Print halshs-00135405, HAL.
    13. Edward J. Bird, "undated". "Social Norms, Cultural Competition, and Welfare Reform: Scant Hope for the Collapsing Family," Wallis Working Papers WP7, University of Rochester - Wallis Institute of Political Economy.
    14. Cartwright, Edward, 2009. "Social norms: Does it matter whether agents are rational or boundedly rational?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(3), pages 403-410, June.
    15. Edward J. Bird, 1999. "Can Welfare Policy Make Use Of Social Norms?," Rationality and Society, , vol. 11(3), pages 343-365, August.
    16. Amegashie, J.A., 2002. "Misery Loves Company: Social Influence and the Supply/Pricing Decision of Popular Night Clubs," Working Papers 2002-10, University of Guelph, Department of Economics and Finance.
    17. Thomas Aronsson & Tomas Sjögren, 2010. "Optimal income taxation and social norms in the labor market," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(1), pages 67-89, February.
    18. Nyborg, Karine, 2019. "Humans in the perfectly competitive market," Memorandum 2/2019, Oslo University, Department of Economics.
    19. Vendrik, Maarten C. M., 1998. "Unstable bandwagon and habit effects on labor supply," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 235-255, August.
    20. Nyborg, Karine, 2019. "The Third Theorem of Welfare Economics: Report from a Fictional Field Study," IZA Discussion Papers 12269, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Welfare Economics; Decision Making; Incentives;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0476. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/iuiiise.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elisabeth Gustafsson (email available below). General contact details of provider: https://edirc.repec.org/data/iuiiise.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.