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Behavioral Economics Class Launches Experiment Across Continents

By Laurie Laker ’12

Jessica Hoel’s Block 1 class Experimental and Behavioral Economics: Social Preferences wants to put everything we know about human-focused economics to the test.

“In economics, neo-classical theory predicts that people are purely selfish, motivated only by their own self-interest and fulfillment,” explains Hoel. “Of course, economists as far back has Adam Smith have known this isn’t literally true, and now modern economists are working to write formal models of how and why people care for other people, and how it affects decisions of all kinds.”

The class, culminating in an experiment conducted on campus, deals with discussions of altruism, fairness, reciprocity, spite, and social norms. These concepts, when placed in an economic structure, provide students with an opportunity to learn experimental design and teamwork, as well as how scientific methods are applied to social science fields.

“The behavioral part of the course really intrigued me,” says Sam Aronson ’20, an economics major with designs on moving into strategy and consulting after graduating next spring.

“Economic theories cannot be explored with models alone, so a lot of the experimental aspect of the class was really exciting. We incorporated a lot of psychological elements into our work, and Jessica really pushed us into areas of academic discomfort and newness, too.”

That push into new areas is deliberate on Hoel’s part. In fact, her syllabus and reading materials for this class are vastly different from what are usually brought to the classroom for a course in behavioral economics.

“Before this class began, I collected every syllabus for behavioral economics I could find and made a spreadsheet of the commonly used materials. Only 13% of papers included on other syllabi studied a non-WEIRD subject pool,” she explains.

WEIRD stands for Western, Educated, Industrialized, Rich, and Democratic. Scholars use the term to criticize the fact that most research on human decisionmaking has studied university students in the U.S. and Europe.

“I made sure to weight my syllabus with a higher percentage of studies of other groups of people (70% non-WEIRD!). I wanted the class to be exposed to experiments and data that better represent humanity.”

Challenging materials and ideas lead to challenging experiments, even for professors.

Hoel ran a similar class last year, and while the on-campus experiment was successful, it was also criticized. “’How do you know your results aren’t unique to CC students?’ people asked me in academic seminars. Good point,” Hoel says. So, she reached out to the Busara Center for Behavioral Economics in Nairobi, Kenya. For five years now, Busara has been running psychology and economics experiments with non-WEIRD populations. They started in Kenya, and now have projects in Uganda, Tanzania, Nigeria, Ethiopia, Peru, Fiji, and India. During graduate school Hoel lived and worked in Kenya for more than a year, and knew some of the staff at Busara.

“I told my friends at Busara about my class, our first experiment last year, and how dedicated my students are to creating new knowledge for the world. A recent CC grad has been working at Busara for two years (Georgina Mburu ’17), so they already knew that CC students are special. The leaders at Busara were intrigued,” she explains.

“The CC Social Science Executive Committee granted us some money, as did the Dean’s office SEGway program. I spent last summer working with my student co-author Bridget Galaty ’21 (one of the students in last year’s class), another co-author Prachi Jain, and several staff members at Busara to plan and improve the study, and we’re now set to run the same experiment in Kenya that we ran at CC last year.”

This year, the class took it to the next level. Instead of approaching Busara after the students’ experiment was finished, this time a team from Busara Skyped in from Kenya to critique the students’ ideas and help decide which experiment the students would run on campus.

“The class both takes advantage of, and is put under immense pressure, by the Block Plan,” says Cole Simon ’20, also an economics major.

Conducting one large-scale experiment is hard enough. Pitching and sharing that experiment to researchers in another country, however, adds a certain level of pressure.

The experiment design changed drastically over the course of the block — just another challenge thrown in for good measure! Ultimately, the class’s experiment was designed to test how types of anger affect pro-social behavior, such as generosity or situational kindnesses. Students pitched the experiment to Busara in the second week of the block, and ran the experiment in the final week — leaving two days to conduct an experiment across the entirety of campus!

“We used game-based experiments to introduce three different groups to different levels of anger,” explains Ben Seitz-Sitek ’20, a computer science major.

“There’s the first level, where you have anger to punish someone for something that happened by accident, there’s the level where you’re angry because you were hurt on purpose, and then there’s the final level which is a combination of the first two.”

“We’re looking at how frustration affects your social preferences and choices. Under difficult circumstances, when someone wrongs you, we test how that affects your reactions to that person, and if it impacts your choices socially,” adds Simon.

Games in economics aren’t what you or I would necessarily think of as games. They’re actually models, or hypothetical situations, designed to illustrate economic theories.

The students decided to use a dictator game to test their ideas. One person is given some money, say $10, while the other person starts with nothing. The dictator is asked how much of their money they want to give to the other person.

“With that game foundation for experiment design, as well as the research papers we read, it allowed us the freedom to modify the games for our own needs — combining emotional research and the game response,” adds Aronson.

The experiment was a roaring success. The class surveyed more than 500 people in just 48 hours of data collection. The initial findings conclude that intention-based anger reduces generosity and impacts social preferences the most.

“Our preliminary results show that when someone frustrates you on purpose, you are less generous toward them. If they wrong you by accident, you are not less generous. But if you are wronged by random chance, you might take it out on other people,” explains Hoel.

“But the students and I only had two hours of data analysis before our presentation to the campus, so these results are very preliminary!”

“We’re able to conduct a large-scale study across campus, expand and present that to collaborators in another country, and have options for publication down the line. The catch is we have to do that all in three-and-a-half weeks!” says Simon.

The Busara Center’s role in how things move forward is encouraging. A continuous collaboration with Colorado College students and faculty is something that Hoel is very optimistic about, also.

“It’s rare to see an economic experiment run on two continents in tandem, but it’s essential to better understand human decision-making,” says Hoel. “CC students have great ideas, but to run these experiments in both places properly, we need help. Busara has the technical and contextual expertise to make sure we design experiments that will teach us things about both WEIRD and non-WEIRD people. We’re excited for their partnership with CC and a collaborative relationship between researchers, scholars, and students.”