Published Papers

Social Image Concerns and Welfare Take-Up with Jana Friedrichsen and Tobias König,
Journal of Public Economics, Vol. 168, 2018, pp. 174-192. (Link, WP)

Abstract Using a laboratory experiment, we present first evidence that social image concerns causally reduce the take-up of an individually beneficial transfer. Our design manipulates the informativeness of the take-up decision by varying whether transfer eligibility is based on ability or luck, and how the transfer is financed. We find that subjects avoid the inference both of being low-skilled (ability stigma) and of being willing to live off others (free-rider stigma). Using a placebo treatment, we exclude other explanations for the observed stigma effects. Although stigma reduces take-up, elicitation of political preferences reveals that only a minority of “taxpayers” vote for the public transfer.
Presentations 2017
Nordic Conference on Behavioral and Experimental Economics, Gothenburg*
VfS Annual Congress, Vienna*
Lindau Meeting Of The Laureates Of The Sveriges Riksbank, Lindau*
European Economic Association - Annual Congress, Lisbon
Maastricht Behavioral and Experimental Economics Symposium, Maastricht*
ZEW Public Finance Conference, Mannheim*
International Meeting on Experimental and Behavioral Social Sciences (IMEBESS), Barcelona
"Arne Ryde Workshop on Identity, Image and Economic Behavior, Image", Lund*
Economic Science Association - European Meeting, Bergen
Micro Reading Group, Berlin
(* presented by coauthor)

Do prices and purchases respond similarly to soft drink tax increases and cuts? with Sinne Smed,
Economics and Human Biology, Vol. 37, 2020, 100864. (Link)

Abstract While in January 2012, Denmark increased the long-standing tax on sugary soft drinks, the tax was cut by half in July 2013 and then completely repealed in January 2014. In this study, we examine whether increases and cuts of the soft drink tax lead to symmetric over- or under-shifting to prices and to symmetric demand responses. We use longitudinal scanner data of 1,282 Danish households to estimate within-product changes in prices and within-household changes in purchase quantity. The tax hike was overshifted by a factor of 2.2 while the tax repeal was passed through with a factor of 1.2. On average, consumption was 13.4 percent lower the year after the tax increase compared to the year before. The repeal of the tax was associated with an increase in purchase quantity of 31.0 percent. This is equivalent to price elasticities of 1.1 and 1.3 respectively. The results suggest that consumers react stronger to tax cuts than to tax increases. Furthermore, the increase in consumption following a tax cut has no limiting effect on the consumption of other beverages suggesting an increase in the intake of calories. This might have implications for health in countries that consider repealing current taxes on soft drinks.

Working Papers

Sin Taxes and Self Control with Sinne Smed.
R&R at AEJ: Economic Policy
CRC TRR 190 Discussion Paper No. 250, July 2020. (PDF)

Abstract "Sin taxes" are high on the political agenda in the global fight against obesity. According to theory, they are welfare improving if consumers with low self-control are at least as price responsive as consumers with high self-control, even in the absence of externalities. In this paper, we investigate if consumers with low and high self-control react differently to sin tax variation. For identification, we exploit two sets of sin tax reforms in Denmark: first, the increase of the soft drink tax in 2012 and its repeal in 2014 and, second, the fat tax introduction in 2011 and its repeal in 2013. We assess the purchase response empirically using a detailed homescan household panel. Our unique dataset comprises a survey measure of self-control linked to the panelists, which we use to divide the sample into consumers with low and high levels of self-control. We find that consumers with low self-control reduce purchases less strongly than consumers with high self-control when taxes go up, but increase purchases to a similar extent when taxes go down. Hence, we document an asymmetry in the responsiveness to increasing and decreasing prices. We find empirical and theoretical support that habit formation shapes the differential response by self-control. The results suggest that price instruments are not an effective tool for targeting self-control problems.
Presentations 2020
Bridges Seminar, University of Warwick
ZEW Mannheim
MPI for Tax Law and Public Finance, Munich
University of Essex
Risky Health Behaviors Workshop, Hamburg
CEBI at University of Copenhagen
FAIR at NHH, Bergen
Linnaeus University, Växjö
European Economic Association - Annual Congress, Manchester
International Institute of Public Finance (IIPF) - Annual Congress, Glasgow
Institute for Fiscal Studies (IFS), London
Applied Micro Workshop, Hertie School of Governance, Berlin
Retreat of the CRC TRR 190 "Rationality and Competition", Schwanenwerder
Food and Health Economics Workshop, Toulouse
DIW GC Summer Workshop, Potsdam
DIW Cluster Seminar, Berlin
Behavioral Welfare Economics Workshop, Berlin
IFRO Behavioral Economics Seminar, Copenhagen

Protecting the Ego: Motivated Information Selection and Updating with Alessandro Castagnetti, January 2021. (PDF)

Abstract We investigate how individuals search for ego-relevant information and then use this information to update their beliefs. In our lab experiment, subjects can select the information structure that gives them feedback regarding their rank in the IQ distribution (ego-relevant treatment) or regarding a random number (control). Subjects are incentivized to report their beliefs truthfully and receive feedback from information structures that they select into (endogenous treatment) or from information structures they are assigned to (exogenous treatment). We find that individuals in the ego-relevant treatment select information structures, in which negative feedback is less salient. When receiving such negative feedback with lower salience they update their beliefs less, but only when feedback is ego-relevant. Hence, subjects select information structures that allow them to misinterpret negative feedback in an ego-preserving way. Moreover, individuals in the ego-relevant treatment choose less informative feedback.
Presentations 2020
EEA Annual Congress 2020*
University of Vienna
Bogota Experimental Economics Conference*
Nordic Conference on Behavioral and Experimental Economics, Kiel*
Economic Science Association - European Meeting, Dijon*
Dr@w Forum, Warwick University*
Warwick PhD Conference*
DIW Micro Reading Group, Berlin
(* presented by coauthor)

Fair Procedures with Naive Agents: Who Wants the Boston Mechanism? with Tobias König, Dorothea Kübler and Lydia Mechtenberg.
CRC TRR 190 Discussion Paper No. 222, December 2019. (PDF)

Abstract We study preferences over procedures in the presence of naive agents. We employ a school choice setting following Pathak and Sönmez (2008) who show that sophisticated agents are better off under the Boston mechanism than under a strategy-proof mechanism if some agents are sincere. We use lab experiments to study the preferences of subjects for the Boston mechanism or the assortative matching. We compare the preferences of stakeholders who know their own role with agents behind the veil of ignorance and spectators. As predicted, stakeholders vote for the Boston mechanism if it maximizes their payoffs and vote for the asssortative matching otherwise. This is in line with the model of Pathak and Sönmez (2008). Subjects behind the veil of ignorance mainly choose the Boston mechanism when the priority at schools is determined randomly. In a second experiment with priorities based on performance in a real-effort task, spectators whose payoff does not depend on the choice of the mechanism are split in their vote for the Boston mechanism and the assortative matching. According to the spectators' statements in the post-experimental questionnaire, the main reason for preferring the Boston mechanism is that playing the game well deserves a higher payoff. These findings provide a novel explanation for the widespread use of the Boston mechanism.

Earn More Tomorrow: Overconfident Income Expectations and Consumer Indebtedness with Antonia Grohmann, Lukas Menkhoff and Christoph Merkle.
CRC TRR 190 Discussion Paper No. 152, April 2019. (PDF)

Abstract This paper examines whether biased income expectations due to overconfidence lead to higher levels of debt-taking. In a lab experiment, participants can purchase goods by borrowing against their future income. We exogenously manipulate income expectations by letting income depend on relative performance in hard and easy quiz tasks. We successfully generate biased income expectations and show that participants with higher income expectations initially borrow more. Overconfident participants scale back their consumption after feedback. However, at the end of the experiment they remain with higher debt levels, which represent real financial losses. To assess the external validity, we find further evidence for the link between overcondence and borrowing behavior in a representative survey (GSOEP-IS).

Policy Work

Zuckersteuern können zu einer gesünderen Ernährung beitragen: Kommentar, DIW Wochenbericht 12/2020, March 2020. (Link)

Wie sinnvoll ist eine Zuckersteuer? Gastbeitrag, Redaktionsnetzwerk Deutschland, 14.03.2020. (Link)

Fear of Stigmatization Prevents Individuals from Claiming Benefits (with Jana Friedrichsen), DIW Weekly Report 26-27/2019, June 2019. (Link, In German: Link)

Softdrinksteuer: Proportionale Steuer ist der vielversprechendste Ansatz, DIW Aktuell 10, May 2018. (Link)

Eine Softdrinksteuer zur fiskalischen Konsumsteuerung, DIW Roundup 103, November 2016. (Link)