Who is Willing to Let Ethics Guide His Economic Decision-Making? Evidence from Individual Investments in Ethical Funds

Recent economics literature has devoted attention towards motives beyond the typical selfish norm for economic decision-making. Yet, it still remains a puzzle who allows such considerations to govern their behavior. This paper contributes by empirically identifying some features which differentiate individuals who choose to bear the cost of ethically guided economic decision-making from others. Using unique Swedish data on individual pension portfolio choices, we find that education, the choice of an occupation that is committed to taking care of others, actively joining a group working for a common cause, clearly predict the choice of an ethical screen for individual investments.In contrast to previous findings on altruism, income, financial wealth and age do not govern the decision. The results therefore suggest that investing ethically is typically a choice of principles.Socially Responsible Investing; Altruism; Individual Financial Investments; Individual Decision-Making; Ethics and Norms

Are Women Asking for Low Wages? Gender Differences in Wage Bargaining Strategies and Ensuing Bargaining Success

Men and women’s labor market outcomes differ along pay, promotion and competitiveness. This paper contributes by uncovering results in a related unexplored field using unique data on individual wage bargaining. We find striking gender differences. Women, like men, also bargain, but they submit lower wage bids and are offered lower wages than men. The adjusted gender wage gap is lower with posted-wage jobs than with individual bargaining, although less is ascribable to the term associated with discrimination. Both women and men use self-promoting, or competitive bargaining strategies, but women self-promote at lower levels. Employers reward self-promotion but the larger the self-promotion, the larger is the gender gap in bargaining success. Women therefore lack the incentives to self-promote, which helps to explain the gender disparities.Individual Wage Bargaining; Competitiveness; Bargaining strategies; Self-promoting Bargaining Strategies; Gender Wage Gap; and Discrimination.

Testing the rationality assumption using a design difference in the TV game show 'Jeopardy'

This paper empirically investigates the rationality assumption commonly applied in economic modeling by exploiting a design difference in the game-show Jeopardy between the US and Sweden. In particular we address the assumption of individuals’ capabilities to process complex mathematical problems to find optimal strategies. The vital difference is that US contestants are given explicit information before they act, while Swedish contestants individually need to calculate the same information. Given a rationality assumption of individuals computing optimally, there should be no difference in the strategies used. However, in contrast to the rational and focal bidding behaviors found in the US, the Swedish players display no optimal behavior. Hence, when facing too complex decisions, individuals abandon optimal strategies.Rationality; Bounded Rationality; Field Experiments

Targetting Risk Lovers? Taxation of Private Pension Savings, Risk Preferences, and Gender

Many countries need to stimulate savings, and especially voluntary pension planning, to meet the demands of an ageing population. This is especially true for the female population as women are expected to live longer while simultaneously having accumulated lower pension wealth. Sweden has been a front-runner in introducing tax-deferred designated pension accounts to stimulate private pension saving, along with self-directed individual public pension accounts. However, a particular feature of these tax-deferred designated pension accounts was that savings were taxed through a presumptive return. In this Article, we show that with heterogeneous risk preferences, this tax policy makes designated pensions unattractive for risk-averse individuals. Using data on self-directed choices and designated pension savings, we empirically confirm our result. In particular, we show that as women are on average more risk averse compared to men, this tax policy had negative effects for women. This Article thus sheds light on the importance of accounting for risk preferences in policymaking addressed towards stimulating adequate pension planning. The Article additionally sheds light on the overall negative consequences of a presumptive tax design such as, e.g., the Dutch “Box-III” tax system

Who is Willing to Let Ethics Guide His Economic Decision-Making? Evidence from Individual Investments in Ethical Funds

Recent economics literature has devoted attention towards motives beyond the typical selfish norm for economic decision-making. Yet, it still remains a puzzle who allows such considerations to govern their behavior. This paper contributes by empirically identifying some features which differentiate individuals who choose to bear the cost of ethically guided economic decision-making from others. Using unique Swedish data on individual pension portfolio choices, we find that education, the choice of an occupation that is committed to taking care of others, actively joining a group working for a common cause, clearly predict the choice of an ethical screen for individual investments. In contrast to previous findings on altruism, income, financial wealth and age do not govern the decision. The results therefore suggest that investing ethically is typically a choice of principles

Are Women Asking for Low Wages? Gender Differences in Wage Bargaining Strategies and Ensuing Bargaining Success

Men and women’s labor market outcomes differ along pay, promotion and competitiveness. This paper contributes by uncovering results in a related unexplored field using unique data on individual wage bargaining. We find striking gender differences. Women, like men, also bargain, but they submit lower wage bids and are offered lower wages than men. The adjusted gender wage gap is lower with postedwage jobs than with individual bargaining, although less is ascribable to the term associated with discrimination. Both women and men use self-promoting, or competitive bargaining strategies, but women self-promote at lower levels. Employers reward self-promotion but the larger the self-promotion, the larger is the gender gap in bargaining success. Women therefore lack the incentives to self-promote, which helps to explain the gender disparities

Who lets ethics guide his economic decision-making? An empirical analysis of individual investments in ethical funds

This paper shows that one out of eight investors chooses ethical funds and foregoes return for ethical principles. However, few screen completely. Human capital, being female and "empathetic" professions all predict ethical decision-making. Interestingly, neither income nor wealth explains screening.Investment decisions Ethics Altruism Socially responsible investing