Karla Hoff, Joseph E. Stiglitz
This paper is an attempt to broaden the standard economic discourse by
importing insights into human behavior not just from psychology, but
also from sociology and anthropology. Whereas the concept of the
decision-maker is the rational actor in standard economics and, in early
work in behavioral economics, the quasi-rational actor influenced by
the context of the moment of decision-making, in some recent work in
behavioral economics the decision-maker could be called the enculturated
actor. This actor's preferences and cognition are subject to two deep
social influences: (a) the social contexts to which he has become
exposed and, especially accustomed; and (b) the cultural mental
models—including categories, identities, narratives, and worldviews—that
he uses to process information. We trace how these factors shape
individual behavior through the endogenous determination of both
preferences and the lenses through which individuals see the world—their
perception, categorization, and interpretation of situations. We offer
a tentative taxonomy of the social determinants of behavior and
describe results of controlled and natural experiments that only a
broader view of the social determinants of behavior can plausibly
explain. The perspective suggests new tools to promote well-being and
economic development.
