Friday, May 29, 2020

How Financial News Affects Prosocial Behavior

Kang, Polly and Daniels, David and Schweitzer, Maurice E., How Financial News Affects Prosocial Behavior (April 22, 2020). SSRN: https://ssrn.com/abstract=3583884

Abstract: A fundamental puzzle in the social and natural sciences is why humans, in contrast to other animals, routinely help strangers at substantial personal cost. Scholars assert that humans’ hyper-prosociality can be explained by the “warm glow” prosocial actors derive from helping others, and predict that people with greater resources will help more. We challenge these assertions. Many prosocial behaviors involving feedback, like volunteering, are actually warm glow gambles: first, prosocial actors invest affective resources trying to help others; then, positive feedback (e.g., feedback suggesting “success”) boosts affective resources but negative feedback (e.g., feedback suggesting “failure”) diminishes affective resources. We theorize that either negative affect shocks (by depleting affective resources) or positive affect shocks (by triggering risk aversion) can decrease people’s likelihood of taking warm glow gambles. We test this by studying the influence of a complex human institution, the stock market, which broadcasts negative affect shocks when the market falls (suggesting bad financial news) and positive affect shocks when it rises (suggesting good financial news). Analyzing a unique, massive five-year dataset of nearly 3 million text messages sent by volunteer crisis counselors, we show that significantly fewer people volunteer when stock returns are either extremely negative or extremely positive; prosocial behavior peaks on “normal” days when returns approach zero. Further supporting our theory, these effects are moderated by the level of positive affect in volunteers’ geographical areas. Our findings contradict existing theories and lay beliefs. Ironically, an institution designed for economic efficiency broadcasts signals that profoundly influence humans’ hyper-prosocial behavior.

Keywords: prosocial behavior; warm glow; prospect theory; financial markets


France: Ideological extremity is associated with a reduced adherence to public health recommendations; at the same time, compliance increases as one moves from Left to Right

Sociodemographic and Psychological Correlates of Compliance with the COVID-19 Public Health Measures in France. Sylvain Brouard, Pavlos Vasilopoulos & Michael Becher. Canadian Journal of Political Science, April 23 2020. : https://doi.org/10.1017/S0008423920000335

Extract: The COVID-19 disease was first identified in Wuhan, China, in December 2019, having since spread rapidly across the world. The infection and mortality rates of the disease have forced governments to implement a wave of public health measures. Depending on the context, these range from the implementation of simple hygienic rules to measures such as social distancing or lockdowns that cause major disruptions in citizens’ daily lives. The success of these crucial public health measures rests on the public's willingness to comply. However, individual differences in following the official public health recommendations for stopping the spread of COVID-19 have not yet to our knowledge been assessed. This study aims to fill this gap by assessing the sociodemographic and psychological correlates of implementing public health recommendations that aim to halt the COVID-19 pandemic. We investigate these associations in the context of France, one of the countries that has been most severely affected by the pandemic, and which ended up under a nationwide lockdown on March 17. In the next sections we describe our theoretical expectations over the associations between sociodemographics, personality, ideology, and emotions with abiding by the COVID-19 public health measures. We then test these hypotheses using data from the French Election Study.

COVID-19 paradoxical duality: there is a tendency to be optimistic about one’s own risk of infection (private optimism) & at the same time to be pessimistic about the risk to others (public pessimism)

Globig, Laura K., Bastien Blain, and Tali Sharot. 2020. “When Private Optimism Meets Public Despair: Dissociable Effects on Behavior and Well-being.” PsyArXiv. May 29. psyarxiv.com/gbdn8

Abstract: When faced with a threat, peoples’ estimate of risk guides their response. When danger is to the self as well as to others two estimates are generated: the risk to oneself and the risk to others. As these estimates likely differ, it is unclear how exactly they drive a response. To answer this question, we studied a large representative sample of Americans facing the COVID-19 pandemic at two time points (N1=1145, N2=683). We discover a paradoxical duality: a tendency to be optimistic about one’s own risk of infection (private optimism) while at the same time to be pessimistic about the risk to others (public pessimism). These two estimates were found to be differentially related to affect and choice. First, private optimism, but not public pessimism, was associated with people’s positive feelings. The association between private optimism and positive affect was mediated by people’s sense of agency over their future. However, negative affect was related to both private risk perception and public risk perception. Second, people predominantly engaged in protective behaviors based on their estimated risk to the population rather than to themselves. This suggests that people were predominantly engaging in protective behaviors for the benefit of others. The findings are important for understanding how people’s beliefs about their own future and that of others are related to protective behaviors and well-being.