How predictions of economic behavior are affected by the socio-economic status of the target person

Abstract

We investigate how the stereotype of the poor (vs. middle class) influences behavioral predictions. In Study 1, participants made predictions regarding another person's economic behavior in scenarios pertaining to rate of time preferences (loss, gain of smaller and larger amount). We find that participants, across scenarios, expect individuals with low SES to show more short-sightedness-i.e., steeper temporal discounting. This pattern persisted until strong diagnostic information about previous economic behavior was provided. These results are novel but consistent with previous work on stereotype application. Study 2 probed stereotype accuracy. Participants with lower vs. higher SES reported how they would act in scenarios matching those of Study 1. We find that they respond very similarly, which is in contrast to the stereotype that poor people are more short-sighted and may possibly be taken to suggest that the association between low SES and short-sightedness is biased.

Keywords: Economic behavior; poor; stereotypes; time preferences.