It is not all about the money -A study of social norms based on Adam Smith`s Theory of Moral Sentiments

Abstract

Social norms have many similarities with Adam Smith`s moral rules of conduct. Basing hypotheses regarding social norms on Smith`s theories on moral behavior, this thesis aims to study whether social norms help explain social behavior. To study social norms, the norm elicitation method of Erin Krupka and Roberto Weber (2013) is applied, both with a within- and between-subject design. The hypothetical situations concern distributional choices, of which “Person A” is granted full allocations rights of a pool of money owned together with another randomly selected “Person B”. Incentivized to match the modal answer, participants are to evaluate each actions available to “Person A” on a fourpoint scale. The elicited norms are also used to make predictions of actual behavior. Behavior is studied separately, in a dictator experiment. The experiment gives evidence of an asymmetry in the norm-profile: people judge an allocation that is preferable to the recipient as socially appropriate, while they tend to judge an action that is preferable to the decision maker as inappropriate. Thus, the norm profiles tells us that people care about more than purely the distribution. The main social norm is to split the money equally, and more than half of the participants comply. However, although people agree more about what is considered socially inappropriate than about what is considered socially appropriate, the action-guiding power of such norms are very small: almost half of the participants violates the social norm by allocating more than half to themselves. Such results suggests that modeling behavior as a tradeoff between compliance to a social norm and monetary payoffs would be able to give better predictions. The data was analyzed with the statistical software Stata/IC 14.1 and Microsoft Excel 2016.