We are All Behavioral, More or Less: Measuring and Using Consumer-Level Behavioral Sufficient Statistics

97 Pages Posted: 12 Feb 2019 Last revised: 14 Apr 2024

See all articles by Victor Stango

Victor Stango

UC Davis Graduate School of Management

Jonathan Zinman

Dartmouth College; Innovations for Poverty Action; Jameel Poverty Action Lab; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: February 2019

Abstract

Can a behavioral sufficient statistic empirically capture cross-consumer variation in behavioral tendencies and help identify whether behavioral biases, taken together, are linked to material consumer welfare losses? Our answer is yes. We construct simple consumer-level behavioral sufficient statistics—“B-counts”—by eliciting seventeen potential sources of behavioral biases per person, in a nationally representative panel, in two separate rounds nearly three years apart. B-counts aggregate information on behavioral biases within-person. Nearly all consumers exhibit multiple biases, in patterns assumed by behavioral sufficient statistic models (a la Chetty), and with substantial variation across people. B-counts are stable within-consumer over time, and that stability helps to address measurement error when using B-counts to model the relationship between biases, decision utility, and experienced utility. Conditional on classical inputs—risk aversion and patience, life-cycle factors and other demographics, cognitive and non-cognitive skills, and financial resources—B-counts strongly negatively correlate with both objective and subjective aspects of experienced utility. The results hold in much lower-dimensional models employing “Sparsity B-counts” based on bias subsets (a la Gabaix) and/or fewer covariates, illuminating lower-cost ways to use behavioral sufficient statistics to help capture the combined influence of multiple behavioral biases for a wide range of research questions and applications.

Suggested Citation

Stango, Victor and Zinman, Jonathan, We are All Behavioral, More or Less: Measuring and Using Consumer-Level Behavioral Sufficient Statistics (February 2019). NBER Working Paper No. w25540, Available at SSRN: https://ssrn.com/abstract=3332288

Victor Stango (Contact Author)

UC Davis Graduate School of Management ( email )

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Davis, CA 95616
United States

Jonathan Zinman

Dartmouth College ( email )

Hanover, NH 03755
United States
603-646-0075 (Phone)

HOME PAGE: http://https://sites.dartmouth.edu/jzinman/

Innovations for Poverty Action

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Jameel Poverty Action Lab

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National Bureau of Economic Research (NBER)

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