China's Generational Divide
The use of experimental economics techniques are important as they highlight the origins of some of the basic preferences that shape our everyday decisions.
China's one-child policy is arguably the most audacious population control measure in modern times. While the Chinese government began dismantling it in 2015, it has been in operation for around 35 years and in that time gave rise to a generation of predominantly one-child families. The media has long characterised this generation as more self-interested and materialistic than that which preceded it. Until recently this has been opinion, but now empirical evidence gleaned through the use of experimental economics techniques suggests these generalisations are more than just intergenerational mudslinging.
Melbourne University economics lecturer Professor Nisvan Erkal, working in conjunction with academics in Australia and China, used games from experimental economics to test the character traits of those born before and after the implementation of the policy.
One of the games included in the study was the "Trust Game", which tests both trust and trustworthiness. Results showed that children born after the implementation of the one-child policy gave 16 per cent less money to their partners and returned 11 per cent less of what they received compared to the those born before the introduction of the policy.
Other games tested altruism, competitiveness and aversion to risk. In each game the difference between subjects born under the policy and their counterparts was significant. The results showed those born after the introduction of the policy were less altruistic, less competitive and more risk averse.
Professor Erkal says the use of experimental economics techniques, such as those employed in the study of the one-child policy, are important as they highlight the origins of some of the basic preferences that shape our everyday decisions. "What shapes our risk preferences, social preferences, trust levels, competitiveness?" she asks. "These preferences play an important role in labour market interactions, marriage market interactions, entrepreneurship, etc. Research like this shows that siblings and family interactions play crucial roles."
Article based on a report by L. Cameron, N. Erkal, L. Gangadharan, X. Meng