Measuring Socially Appropriate Social Preferences

Abstract

We extend the literature structurally estimating social preferences by accounting for the desire to adhere to social norms. Our representative agent is strongly motivated by norms and failing to account for this causes us to overestimate how much agents care about helping those who are worse off. We endogenously identify latent preference types that replicate previous estimates; however, accounting for the normative appropriateness of decisions reveals different motives. Rather than being mostly altruistic, participants are better described as strong altruists or norm followers. Our results (which are robust to moral wiggle room) thus recast prior findings in a new light.

Keywords: experiment, social norms, social preferences, altruism, moral wiggle room, structural estimation, finite mixture models

JEL Classification: C91, D01, D91, D63, D30, C49