Moral consequences of becoming unemployed

Abstract

We test the conjecture that becoming unemployed erodes the extent to which a person acknowledges earned entitlement. We use behavioral experiments to generate incentive-compatible measures of individuals' tendencies to acknowledge earned entitlement and incorporate these experiments in a two-stage study. In the first stage, participants' acknowledgment of earned entitlement was measured by engaging them in the behavioral experiments, and their individual employment status and other relevant socioeconomic characteristics were recorded. In the second stage, a year later, the process was repeated using the same instruments. The combination of the experimentally generated data and the longitudinal design allows us to investigate our conjecture using a difference-in-difference approach, while ruling out the pure selfinterest confound. We report evidence consistent with a large, negative effect of becoming unemployed on the acknowledgment of earned entitlement.U nderstanding how becoming unemployed affects people's reasoning is important. Unemployment and the poverty it engenders is associated with depression, anxiety, stress, low subjective well-being and self-esteem, heightened aversion to risk, and a greater tendency to discount the future within the individual (1-7), and higher rates of suicide, murder, and alcoholrelated death across countries (8, 9). We investigate a different kind of effect, a moral consequence of unemployment that, alongside unemployment's effects on mental health, could explain why people are disengaging from the labor market (10). We test the conjecture that becoming unemployed erodes the extent to which a person acknowledges earned entitlement, i.e., acknowledges an individual's right to keep, consume, or dispose of that which was gained through his or her own effort or endeavor. This right and its acknowledgment underpins labor market functioning and guides taxation and government-spending policy worldwide (11).Survey-based studies find a positive association between low economic status and stated preferences for redistributive taxation and spending (12-16). However, although these surveybased results are consistent with our conjecture, they are also consistent with pure self-interest; purely self-interested individuals would state a preference for minimal or no redistribution when they are relatively well-off as this would minimize their tax burden, but would shift to favoring redistribution on becoming relatively poor owing to job loss (17).We used behavioral experiments to generate incentivecompatible measures of individuals' tendencies to acknowledge earned entitlement that cannot be driven by pure self-interest (18). We incorporated these experiments into an unusual two-stage study. In the first stage, participants' acknowledgment of earned entitlement was measured by engaging them in the behavioral experiments, and their individual employment status and other relevant socioeconomic characteristics were recorded. In the second stage, a year later, the process was repeated using the sa...

The (ir)relevance of unemployment for labour market policy attitudes and welfare state attitudes

“…Normative reasons make it hard to imagine an experimental study on unemployment effects. Barr et al (2016) analyse (and find) unemployment effects on beliefs about earned entitlement in a longitudinal, experimental setting. The experimental setting is, however, not used to randomise treatment but to measure acknowledgement of earned entitlement by inferring it from behavioural tasks.…”

From ideals to deals—The effect of impartiality experience on stakeholder behavior

“…In that case participants were more concordant that uncontrolled inequality, which parties cannot be held responsible for, should be redressed in dictatorial allocations and the weaker party should be compensated. For experiments showcasing the importance of earned entitlements, see [ 10 , 31 , 33 , 34 , 35 , 5 , 36 , 37 , 38 ]. The effects of asymmetries in endowments appear complex.…”

Fair and Unfair Income Inequality

“…There are experimental studies showing that important life events, in particular own experiences with inequality, can alter fairness preferences in adulthood (Bauer et al 2014a;Barr et al 2016;Cassar and Klein 2019). Barr et al (2016) find that having experienced an unemployment spell negatively impacts people's willingness to acknowledge earned entitlement in a real effort version of a dictator game.…”

“…There are experimental studies showing that important life events, in particular own experiences with inequality, can alter fairness preferences in adulthood (Bauer et al 2014a;Barr et al 2016;Cassar and Klein 2019). Barr et al (2016) find that having experienced an unemployment spell negatively impacts people's willingness to acknowledge earned entitlement in a real effort version of a dictator game. A potential explanation for this behavior is found in a laboratory experiment carried out by Cassar and Klein (2019), who show that individuals who first experience losing in a tournament, later redistribute significantly more to participants losing in similar situations.…”