KECD 2310 - ECONOMICS AND MORALITY

Are human being selfish individualists, or moral and social beings who also care about the welfare of others and their own standing in society?

To what extent do they care differently about different groups, about different sources of inequality, and what are their beliefs and attitudes concerning meritocracy?

How do social norms function, and what is the role of social or self- image in sustaining them?

How do these moral and image concerns affect the functioning of markets and, conversely, how do financial incentives and market interactions affect moral behavior?

Should certain “sacred" goods be removed from the market sphere, or people’s choices be influenced for their own good?

The course will address these questions and their policy implications in light of the conceptual and empirical lessons emanating from the field of Behavioral Economics, which lies at the intersection of Economics and Psychology.

There are no formal prerequisites, but the course is best suited to students with a background in microeconomics and statistics.

You will be expected to read research papers in behavioral and experimental economics.

The course will not be overly mathematical but will sometimes rely on formal tools from microeconomics and econometrics.

Lecture 1: Altruism, Fairness and Reciprocity.

Measuring social preferences with simple games.

Lying aversion.

Lecture 2: Fair Prices and Wages.

Fair wages, price gouging, gift exchange.

Lecture 3: Status.

Income comparisons and transparency, competition for status, last place aversion.

Lecture 4: Excuses.

Moral wiggle room, moral licensing, self-serving attributions of fairness.

Lecture 5: Meritocracy and Responsibility.

Rewarding effort, talent or luck, debate over meritocracy.

Attitudes toward inequality and redistribution.

Lecture 6. Belief in a Just World and Zero-Sum Thinking.

Attitudes toward inequality and redistribution, continued.

Lecture 7: Universalism and Parochialism.

Ancient origins, culture, and political implications.

Discrimination, contact hypothesis

.

Lecture 8: Consequentialism and Deontologism.

Cost-benefit analysis versus taboo tradeoffs.

Commodification, repugnant markets.

Lecture 9 : Social Norms and Image Concerns.

Conformism, peer effects, stereotypes, social image.

Pluralistic ignorance.

Lecture 10 : Incentives and Norms.

Intrinsic and extrinsic motivation, effects of incentives on norms, crowing out or in.

Lecture 11. Morals and Markets.

Replacement excuse, dilution of responsibility.

Effects of market contact, economics training.

Lecture 12 Freedom of Choice and Paternalism.

Self-control, choice overload. Libertarian paternalism, nudges, versus regulation.

.

The evaluation is based on two written sit-down exams.

A midterm Exam 40%

Duration Final Exam (60%), each for a duration of one hour and a half.

Students will be expected to write short essays or answer open questions (possibly with sub-parts) based on topics covered in the course.

The use of AI is strictly prohibited for these two sit-down exams.

Sciences Po's educational project encouragesitsstudentsto think independently and critically, to produce demanding and innovative intellectual work, and to respect academic honesty and copyright in the use of sources.

To meet these requirements, and help you consolidate your learning, please refer to the following documents and resources:

● Academic Rules and Regulations (see article 12)

● Academic Integrity Charter

● Mandatory Online Academic Integrity Training via Moodle

● Other Methodological Resources on the student website (Sciences Po Library, etc.)

We remind you that any proven fraud or attempted fraud issanctioned, in accordance with the disciplinary procedures in force at Sciences Po.

Lecture 1: Altruism, Fairness and Reciprocity

• Fehr, Ernst; Gächter, Simon (2000). Cooperation and Punishment in Public Goods Experiments. American Economic Review, 90(4), 980-994.
• Andreoni, James; Vesterlund, Lise (2001). Which Is the Fair Sex? Gender Differences in Altruism. Quarterly Journal of Economics, 116(1), 293-312.
• Gneezy, Uri (2005). Deception: The Role of Consequences. American Economic Review, 95(1), 384-394.

Lecture 2: Fair Prices and Wages

• Krueger, Alan B.; Mas, Alexandre (2004). Strikes, Scabs, and Tread Separations: Labor Strife and the Production of Defective Bridgestone/Firestone Tires. Journal of Political Economy, 112(2), 253-289.
• Kahneman, Daniel; Knetsch, Jack L.; Thaler, Richard H. (1986). Fairness as a Constraint on Profit Seeking: Entitlements in the Market. American Economic Review, 76(4), 728-741.
• Mas, Alexandre (2006). Pay, Reference Points, and Police Performance. Quarterly Journal of Economics, 121(3), 783-821.

Lecture 3: Status

• Mas, Alexandre (2017). Does Transparency Lead to Pay Compression? Journal of Political Economy, 125(5), 1539-1578.
• Luttmer, Erzo F. P. (2005). Neighbors as Negatives: Relative Earnings and Well-Being. Quarterly Journal of Economics, 120(3), 963-1002.
• Cullen, Zoë B.; Perez-Truglia, Ricardo (2022). How Much Does Your Boss Make? The Effects of Salary Comparisons. Journal of Political Economy, 130(3), 766-822.

Lecture 4: Excuses

• Babcock, Linda; Loewenstein, George; Issacharoff, Samuel; Camerer, Colin (1995). Biased Judgments of Fairness in Bargaining. American Economic Review, 85(5), 1337-1343.
• Di Tella, Rafael; Perez-Truglia, Ricardo; Babino, Aldo; Sigman, Mariano (2015). Conveniently Upset: Avoiding Altruism by Distorting Beliefs About Others' Altruism. American Economic Review, 105(11), 3416-3442.
• Exley, Christine L. (2016). Excusing Selfishness in Charitable Giving: The Role of Risk. Review of Economic Studies, 83(2), 587-628.

Lecture 5: Meritocracy and Responsibility

• Cappelen, Alexander W.; Konow, James; Sørensen, Erik Ø.; Tungodden, Bertil (2013). Just Luck: An Experimental Study of Risk-Taking and Fairness. American Economic Review, 103(4), 1398-1413.
• Cappelen, Alexander W.; Hole, Astri Drange; Sørensen, Erik Ø.; Tungodden, Bertil (2007). The Pluralism of Fairness Ideals: An Experimental Approach. American Economic Review, 97(3), 818-827.
• Andre, Peter (2025). Shallow Meritocracy. Review of Economic Studies, 92(2), 772-807.

Lecture 6. Belief in a Just World and Zero-Sum Thinking

• Chinoy, Sahil; Nunn, Nathan; Sequeira, Sandra; Stantcheva, Stefanie (2025). Zero-SumThinking and the Roots of U.S. Political Differences. American Economic Review. (forthcoming); NBER Working Paper 31688 (revised April 2025).
• Bergeron, Augustin; Dube, Oeindrila; Khurana, Saloni; Sun, Charlotte; Zhuravskaya, Ekaterina (2023). Market Size and Moral Behavior. NBER Working Paper, No. 31663.
• Alesina, Alberto; Stantcheva, Stefanie; Teso, Edoardo (2018). Intergenerational Mobility and Preferences for Redistribution. American Economic Review, 108(2), 521-554.

Lecture 7: Universalism and Parochialism

• Enke, Benjamin; Rodriguez-Padilla, Ricardo; Zimmermann, Florian (2023). Moral Universalism and the Structure of Ideology. Review of Economic Studies, 90(4), 1934-1962.
• Cappelen, Alexander W.; Enke, Benjamin; Tungodden, Bertil (2025). Universalism: Global Evidence. American Economic Review, 115(1), 43-76.
• Rao, Gautam (2019). Familiarity Does Not Breed Contempt: Diversity, Discrimination, and Generosity in Delhi Schools. American Economic Review, 109(3), 774-809.

Lecture 8: Consequentialism and Deontologism

• Roth, Alvin E. (2007). Repugnance as a Constraint on Markets. Journal of Economic Perspectives, 21(3), 37-58.
• Becker, Gary S.; Elias, Julio J. (2007). Introducing Incentives in the Market for Live and Cadaveric Organ Donations. Journal of Economic Perspectives, 21(3), 3-24.
• Lacetera, Nicola; Macis, Mario; Slonim, Robert (2012). Will There Be Blood? Incentives and Displacement Effects in Pro-Social Behavior. American Economic Review, 102(5), 1868-1910.

Lecture 9 : Social Norms and Image Concerns

• Bursztyn, Leonardo; Egorov, Georgy; Fiorin, Stefano (2020). From Extreme to Mainstream: The Erosion of Social Norms. American Economic Review, 110(11), 3522-3548.
• Bursztyn, Leonardo; González, Alessandra; Yanagizawa-Drott, David (2020). Misperceived Social Norms: Women Working Outside the Home in Saudi Arabia. American Economic Review, 110(10), 2997-3029.
• Braghieri, Luca (2024). Political Correctness, Social Image, and Information Transmission. American Economic Review, 114(12), 3877-3904.

Lecture 10 : Incentives and Norms

• Duflo, Esther; Hanna, Rema; Ryan, Stephen P. (2012). Incentives Work: Getting Teachers to Come to School. American Economic Review, 102(4), 1241-1278.
• Alfitian, Jakob; Sliwka, Dirk; Vogelsang, Timo (2024). When Bonuses Backfire: Evidence from the Workplace. Management Science, 70(9), 6395-6414.
• Ashraf, Nava; Bandiera, Oriana; Jack, Kelsey (2014). No Margin, No Mission? A Field Experiment on Incentives for Public Service Delivery. Journal of Public Economics, 120, 1-17.

Lecture 11. Morals and Markets

• Bartling, Björn; Weber, Roberto A.; Yao, Lan (2015). Do Markets Erode Social Responsibility? Quarterly Journal of Economics, 130(1), 219-266.
• Bartling, Björn; Özdemir, Yağız (2023). The Limits to Moral Erosion in Markets: Social Norms and the Replacement Excuse. Games and Economic Behavior, 138, 143-160.
• Falk, Armin; Szech, Nora (2013). Morals and Markets. Science, 340(6133), 707-711.

Lecture 12 Freedom of Choice and Paternalism

• Benartzi, Shlomo; Thaler, Richard H. (2004). Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving. Journal of Political Economy, 112(S1), S164-S187.
• Carroll, Gabriel D.; Choi, James J.; Laibson, David; Madrian, Brigitte C.; Metrick, Andrew (2009). Optimal Defaults and Active Decisions. Quarterly Journal of Economics, 124(4), 1639-1674.
• Schilbach, Frank (2019). Alcohol and Self-Control: A Field Experiment in India. American Economic Review, 109(4), 1290-1322.