Experimental & Behavioural Economics Seminar - Stephanie Heger (University of Sydney)

Title: Altruism begets altruism: Nudging our way to a more virtuous society?

Abstract: Researchers have long been interested in understanding what motivates individuals to increase altruism, cooperative behavior and contributions to public goods. However, theories of moral licensing suggest that increases in virtuous acts ``today" are likely to be followed by an increase in immoral acts ``tomorrow", rendering the gains to society ambiguous. On the other hand, theories of moral consistency predict the opposite. Using a popular policy nudge, the default option, we show that an exogenous increase in altruism ``today" causes an increase in altruism ``tomorrow". We rule out that the nudge has a direct inter-temporal effect and instead show that our findings are consistent with a model of habit formation and moral consistency. Our local average treatment effect indicates that the nudge-induced increase in giving in round 1 of the experiment causes a 40 percentage point (or 200\%) increase in the propensity to give in round 2. Our findings suggest a way forward in promoting a more virtuous society.