Ego vs. Sociotropic: using survey experiments to explain individual trade preferences. Lena Schaffer & Gabriele Spilker ETH Zürich

Transcription

1 Ego vs. Sociotropic: using survey experiments to explain individual trade preferences Lena Schaffer & Gabriele Spilker ETH Zürich

2 General Motivation The domestic consensus in favor of open markets will ultimately erode to a point where a generalized resurgence of protectionism becomes a serious possibility (Rodrik 1997: 6) One currently observes return to more protectionism and standstill of multilateral trade liberalization Policy makers face an important trade-off: trade should increase general national welfare but at the same time creates winners and losers Especially in democracies public opinion on trade plays an important role; in particular in times of crises

3 Individual trade preferences Standard trade theory (HO-RV Models): Economic self-interest as central to an individuals trade preference formation. Non-economic explanations Other variables are more important for an individual s trade preference such as gender, outgroup anxiety, social capital endowment, etc. Sociotropic models Not self-interest that determines preference, but assessment on how the nation is faring under trade is decisive.

4 Informational criticism Implicit assumption underlying these models is that citizens make complex calculations on either their factoral endowment or sectoral affiliation to form their trade preference Trade policy topic is generally considered to be a complex issue about which most respondents are poorly informed (Burgoon and Hiscox 2004) and/or prescribe little salience to (Guisinger 2009).

5 Informational criticism We question this assumption and test how people react if they are aware that they personally or nationally gain or lose from trade and which of the two aspects suggested within the literature (personal vs. national) are more important

6 Research Questions Do individuals focus more on ego- or socio-tropic benefits/costs of free trade? Do they and if so how - trade off one against the other? Do they evaluate their trade preference more in a factor-endowments (H-O) reasoning or given sectoral conflict lines as predicted within the specific sectors (RV) framework?

7 Self-interest based models Factor-based view (H1a): Individuals that are endowed with labor skill and / or are owners of capital are more in favor of trade Sector-based view (H1b): Individuals working in sectors that are comparatively advantaged will embrace trade openness

8 Sociotropic: Informational models H2: Individuals' exposure to information on trade's impact on the collective level (e.g. country) has an impact on their trade preference Egotropic Factor-based view (H3a): Individuals' exposure to information on trade's impact on the individual (factor endowments) level has an impact on their trade preference Sector-based view (H3b): Individuals' exposure to information on trade's impact on the individual (sector) level has an impact on their trade preference

9 Research Design Survey embbeded experiments within Amazon Mechanical Turk (AMT) Respondents in the US 923 respondents for factor-endowment experiment 955 respondents for the sectoral experiment

10 Experimental setup

11 Dependent variable You may have heard of globalization, that is the general opening-up of all economies, which leads to the creation of a world-wide market. For each of the following statements, could you please tell if you tend to agree or if you tend to disagree: (1)Overall, economic globalization is a good thing for the US and (2)overall, economic globalization is a good thing for me personally.

12 Sociotropic treatments Positive country profits from free-trade due to economic growth and potentially due to less unemployment Sociotropic treatments Negative country loses from trade because it becomes more susceptible to the economic problems of other countries that could have spill-over effects on own country, potentially more unemployment Control International trade has increased over the past years

13 Egotropic treatments Egotropic treatments Positive (factor endowment model) Positive (sectoral model) Negative (factorendowment model) Negative (sectoral model) Control highly educated individuals profit from free trade since their job security and their income increase the specific sector (in which the individual works) profits from free trade, consequences are: jobs not offshored and more revenue individuals with little education lose from free trade since their job security and their income decrease the specific sector loses from free trade, consequences are: jobs being offshored and less revenue International trade has increased over the last years

14 Result: Hypothesis 1 (1) (2) (3) age -0.03** -0.03** -0.03** (0.015) (0.015) (0.015) income * (0.062) (0.061) (0.056) Import competition: trade flows (0.414) Import competition: compensation (0.430) gender (0.365) (0.367) (0.345) Education: high 1.46*** 1.44** 1.52*** (0.566) (0.581) (0.539) Education: middle 1.20** 1.18** 1.14** (0.554) (0.564) (0.522) Constant (1.001) (1.001) (0.946) Observations Log Likelihood

15 Treatment effects for (factor based) globalization winners and losers (Hypotheses 2 and 3a)

16 Treatment effects for (sector based) globalization winners and losers (Hypotheses 2 and 3a)

17 Conclusion and Discussion Our results support a factor-based reasoning more than a sector-based reasoning of individuals when forming trade preferences In factor-based experiment, individuals never react to country information In sector-based experiment, they never seem to react to positive information with higher trade approval rates, but only to negative information on the country level.

18 Conclusion and Discussion Are these bad news for policy makers, since their ability to increase support for further trade liberalization by telling citizens that their country will profit from this process seems to be rather limited?

19 Robustness checks