skip to main content
US FlagAn official website of the United States government
dot gov icon
Official websites use .gov
A .gov website belongs to an official government organization in the United States.
https lock icon
Secure .gov websites use HTTPS
A lock ( lock ) or https:// means you've safely connected to the .gov website. Share sensitive information only on official, secure websites.

Explore Research Products in the PAR
It may take a few hours for recently added research products to appear in PAR search results.


Title: The persistence of cognitive biases in financial decisions across economic groups
While economic inequality continues to rise within countries, efforts to address it have been largely ineffective, particularly those involving behavioral approaches. It is often implied but not tested that choice patterns among low-income individuals may be a factor impeding behavioral interventions aimed at improving upward economic mobility. To test this, we assessed rates of ten cognitive biases across nearly 5000 participants from 27 countries. Our analyses were primarily focused on 1458 individuals that were either low-income adults or individuals who grew up in disadvantaged households but had above-average financial well-being as adults, known as positive deviants. Using discrete and complex models, we find evidence of no differences within or between groups or countries. We therefore conclude that choices impeded by cognitive biases alone cannot explain why some individuals do not experience upward economic mobility. Policies must combine both behavioral and structural interventions to improve financial well-being across populations.  more » « less
Award ID(s):
2218595
PAR ID:
10515548
Author(s) / Creator(s):
; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; more » ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; « less
Publisher / Repository:
Nature
Date Published:
Journal Name:
Scientific Reports
Volume:
13
Issue:
1
ISSN:
2045-2322
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
More Like this
  1. ; ; ; ; ; ; ; ; ; ; et al (, Nature)
    Abstract Social capital—the strength of an individual’s social network and community—has been identified as a potential determinant of outcomes ranging from education to health 1–8 . However, efforts to understand what types of social capital matter for these outcomes have been hindered by a lack of social network data. Here, in the first of a pair of papers 9 , we use data on 21 billion friendships from Facebook to study social capital. We measure and analyse three types of social capital by ZIP (postal) code in the United States: (1) connectedness between different types of people, such as those with low versus high socioeconomic status (SES); (2) social cohesion, such as the extent of cliques in friendship networks; and (3) civic engagement, such as rates of volunteering. These measures vary substantially across areas, but are not highly correlated with each other. We demonstrate the importance of distinguishing these forms of social capital by analysing their associations with economic mobility across areas. The share of high-SES friends among individuals with low SES—which we term economic connectedness—is among the strongest predictors of upward income mobility identified to date 10,11 . Other social capital measures are not strongly associated with economic mobility. If children with low-SES parents were to grow up in counties with economic connectedness comparable to that of the average child with high-SES parents, their incomes in adulthood would increase by 20% on average. Differences in economic connectedness can explain well-known relationships between upward income mobility and racial segregation, poverty rates, and inequality 12–14 . To support further research and policy interventions, we publicly release privacy-protected statistics on social capital by ZIP code at https://www.socialcapital.org . 
    more » « less
  2. ; ; ; ; ; (, American Economic Review)
    Low-income families often live in low-upward-mobility neighborhoods. We study why by using a randomized trial with housing voucher recipients that provided information, financial support, and customized search assistance to move to high-opportunity neighborhoods. The treatment increased the fraction moving to high-upward-mobility areas from 15 to 53 percent. A second trial reveals this treatment effect is driven primarily by customized search assistance. Qualitative interviews show that the intervention relaxed bandwidth constraints and addressed family-specific needs. Our findings imply many low-income families do not have strong preferences to stay in low-opportunity areas and that barriers in housing search significantly increase residential segregation by income. 
    more » « less
  3. ; ; ; ; (, American economic review)
    Low-income families in the United States tend to live in neighborhoods that offer limited opportunities for upward income mobility. One potential explanation for this pattern is that families prefer such neighborhoods for other reasons, such as affordability or proximity to family and jobs. An alternative explanation is that they do not move to high-opportunity areas because of a lack of information or barriers that prevent them from making such moves. We test between these explanations using a twophase randomized controlled trial with housing voucher recipients in Seattle and King County. We first provided a bundle of resources to facilitate moves to high-upward-mobility neighborhoods: information about high-opportunity areas, short-term financial assistance, customized assistance during the housing search process, and connections to landlords. This bundled intervention increased the fraction of families who moved to high-upward-mobility areas from 15% in the control group to 53% in the treatment group. To understand the mechanisms underlying this effect, we ran a second phase with three arms: (1) information about high-opportunity areas and financial assistance only; (2) reduced support services in addition to information and financial assistance; and (3) full support services, as in the original bundled intervention. The full services had five times as large a treatment effect as the information and financial incentives treatment and three times as large an effect as the reduced support intervention, showing that high-intensity, customized support enables moves to opportunity. Interviews with randomly selected families reveal that the program succeeded by relaxing families’ bandwidth constraints and addressing their specific needs, from identifying suitable units to providing emotional support to brokering with landlords. Families induced to move to higher opportunity areas tend to stay in their new neighborhoods in subsequent years and report higher levels of neighborhood satisfaction after moving. Our findings imply that many low-income families do not have a strong preference to stay in low-opportunity areas and that barriers in the housing search process are a central driver of residential segregation by income. 
    more » « less
  4. ; (, Proceedings of the National Academy of Sciences)
    Where an individual grows up has large implications for their long-term economic outcomes, including earnings and intergenerational mobility. Even within the United States, the “causal effect of place” varies greatly and cannot be fully explained by socioeconomic conditions. Across different nations, variation in growth and mobility have been linked to more individualistic cultures. We assess how variation of historically driven individualism within the United States affects mobility. Areas in the United States that were isolated on the frontier for longer periods of time during the 19th century have a stronger culture of “rugged individualism” [S. Bazzi, M. Fiszbein, M. Gebresilasse, Econometrica 88, 2329–2368 (2020)]. We combine county-level measures of frontier experience with modern measures of the causal effect of place on mobility—the predicted percentage change in an individual’s earnings at age 26 y associated with “growing up” in a particular county [R. Chetty, N. Hendren, Q. J. Econ. 133, 1163–1228 (2018)]. Using commuting zone fixed effects and a suite of county-level controls to absorb regional variation in frontier experience and modern economic conditions, we find an additional decade of frontier experience results in 25% greater modern-day income mobility for children of parents in the 25th percentile of income and 14% for those born to parents in the 75th percentile. We use mediation analysis to present suggestive evidence that informal manifestations of “rugged individualism”—those embodied by the individuals themselves—are more strongly associated with upward mobility than formal policy or selective migration. 
    more » « less
  5. ; ; ; ; ; ; ; ; ; ; et al (, PLOS ONE)
    Didden, Robert (Ed.)
    Recent findings suggest that stigma and camouflaging contribute to mental health difficulties for autistic individuals, however, this evidence is largely based on UK samples. While studies have shown cross-cultural differences in levels of autism-related stigma, it is unclear whether camouflaging and mental health difficulties vary across cultures. Hence, the current study had two aims: (1) to determine whether significant relationships between autism acceptance, camouflaging, and mental health difficulties replicate in a cross-cultural sample of autistic adults, and (2) to compare these variables across cultures. To fulfil these aims, 306 autistic adults from eight countries (Australia, Belgium, Canada, Japan, New Zealand, South Africa, the United Kingdom, and the United States) completed a series of online questionnaires. We found that external acceptance and personal acceptance were associated with lower levels of depression but not camouflaging or stress. Higher camouflaging was associated with elevated levels of depression, anxiety, and stress. Significant differences were found across countries in external acceptance, personal acceptance, depression, anxiety, and stress, even after controlling for relevant covariates. Levels of camouflaging also differed across countries however this effect became non-significant after controlling for the covariates. These findings have significant implications, identifying priority regions for anti-stigma interventions, and highlighting countries where greater support for mental health difficulties is needed. 
    more » « less
  • Citation Formats
  • MLA
  • APA
  • Chicago
  • BibTeX
  • Save / Share this Record
  • Send to Email