June 05, 2024
12:50
CORE C.035
François Maniquet
(CORE)
will give a presentation on :
The welfare cost of social pressure
Abstract :
A basic assumption in welfare economics is that rational and well-informed choices reveal what a person considers is good for them. Social pressure, however, can be a source of discrepancy between choices and welfare. We have collected data from a sample of more than one thousand German mothers of young children about their preferred labor time under different scenarios. Based on a vignette survey, we find evidence that some women (especially wives of highly educated men, and West-German wives) have a lower labor time whereas even more women have a larger labor time than if women were not criticized by people around them based on their labor time. We then estimate a discrete labor choice model based on which we compute the welfare cost of this social pressure. We find that the effect of the social pressure to stay home on revealed preference for leisure is four times larger than that of having an additional child, whereas social pressure is on average equivalent to an additional tax of 2.5% on household disposable income.