Contributions published at Theory of Economic Policy and Non-Market Economics (Bruno Frey)

In the course of history, a large number of politicians have been assassinated. Rational choice hypotheses are developed and tested using panel data covering more than 100 countries over a period of 20 years. Several strategies, in addition to security measures, are shown to significantly reduce the probability of politicians being attacked or killed: extended institutional and governance quality, democracy, voice and accountability, a well functioning system of law and order, decentralization via the division of power and federalism, larger cabinet size and strengthened civil society. There is also support for a contagion effect.

"Publication and citation rankings have become major indicators of the scientificnworth of universities and countries, and determine to a large extent the career ofnindividual scholars. We argue that such rankings do not effectively measure researchnquality, which should be the essence of evaluation. For that reason, an alternativenranking is developed as a quality indicator, based on membership on academic editorialnboards of professional journals. It turns out that especially the ranking of individual scholars is far from objective. The results differ markedly, depending on whethernresearch quantity or research quality is considered. Even quantity rankings are notnobjective; two citation rankings, based on different samples, produce entirely different results. It follows that any career decisions based on rankings are dominated by chance and do not reflect research quality. Instead of propagating a ranking based on board membership as the gold standard, we suggest that committees make use of this quality indicator to find members who, in turn, evaluate the research quality of individual scholars."

This paper explored the determinants of survival in a life and death situation created by an external and unpredictable shock. We are interested to see whether pro-social behaviour matters in such extreme situations. We therefore focus on the sinking of the RMS Titanic as a quasi-natural experiment do provide behavioural evidence which is rare in such a controlled and life threatening event. The empirical results support that social norm such as “women and children first” survive in such an environment. We also observe that women of reproductive age have a higher probability of surviving among women. On the other hand, we observe that crew members used their information advantage and their better access to resources (e.g. lifeboats) to generate a higher probability of surviving. The paper also finds that passenger class, fitness, group size, and cultural background matter.

Die Benediktinerklöster weisen im Vergleich zu anderen Institutionen eine ungewöhnlich lange Lebensdauer auf. Unsere empirische Untersuchung aller je existierenden Benediktinerabteien in Bayern, Baden-Württemberg und der Deutschschweiz zeigt, dass ein durchschnittliches Kloster fast 500 Jahren alt wird. Kombiniert mit dem Befund, dass nur rund ein Viertel der Klosterschliessungen auf Führungsversagen zurückzuführen ist, darf auf eine Organisationsform mit ausserordentlicher Langlebigkeit und Stabilität geschlossen werden. Dies ist nicht nur religiösen und kirchlichen Ursachen zuzuschreiben. Die Entwicklung einer ganz eigen geprägten Führungsstruktur, oder Governance, trägt wesentlich zur Erfolgsgeschichte dieser Institutionen bei. Ein ausgefeiltes System von internen und externen Kontrollmechanismen verhindert Missbrauch und Fehlverhalten von Äbten und Mönchen und fördert damit die Überlebensfähigkeit der Abteien.nIn diesem Beitrag folgt der empirischen Analyse eine detaillierte Betrachtung der benediktinischen Governance und deren Erfolgsfaktoren. Im Schlussabschnitt wird dargelegt, warum monastische Führungsprinzipien auch über das Klosterwesen hinaus Relevanz besitzen. Der Aufsatz wurde aus einer psychologisch ökonomischen Perspektive heraus verfasst:1 der erste Autor ist Betriebswirtschafter, der zweite Volkswirtschafter. Diese Herangehensweise, welche die in der Corporate Governance herausgebildeten Begrifflichkeiten aufnimmt, bedeutet in keiner Weise, dass Abteien auf rein wirtschaftliche Institutionen reduziert werden sollen.

The corporate governance structure of monasteries is analyzed to derive new insights into solving agency problems of modern corporations. In the long history of monasteries, some abbots and monks lined their own pockets and monasteries were undisciplined. Monasteries developed special systems to check these excesses and therefore were able to survive for centuries. These features are studied from an economic perspective. Benedictine monasteries in Baden-Württemberg, Bavaria and German speaking Switzerland have an average lifetime of almost 500 years and only a quarter of them broke up as a result of agency problems. We argue that this is due to an appropriate governance structure, relying strongly on the intrinsic motivation of the members and on internal control mechanisms.

Deterrence has been a crucial element in fighting terrorism. An economic analysis of terrorism also points to alternative and potentially superior policies. We suggest three policies that can well be integrated into existing constitutions of democratic and rule-based countries. Two policies are based on diminishing the benefits of committing terrorist acts for prospective terrorists. This can be done by decentralising various parts of society or by diverting attention from terrorists, once a terrorist act has been committed. A third policy is to raise the relative costs of terrorism by lowering the costs of non-violent means for pursuing political goals.

People spend a lot of time commuting and often find it a burden. According to economics, the burden of commuting is chosen when compensated either on the labor or on the housing market so that individuals’ utility is equalized. However, in a direct test of this strong notion of equilibrium, we find that people with longer commuting time report systematically lower subjective well-being. Additional empirical analyses do not find institutional explanations of the empirical results that commuters systematically incur losses. We discuss several possibilities of an extended model of human behavior able to explain this ‘commuting paradox’.

Revolutionary developments in economics are rare. The conservative bias of the field and its enshrined knowledge make it difficult to introduce new ideas not in line with received theory. Happiness research, however, has the potential to change economics substantially. Its findings, which are gradually being taken into account in standard economics, can be considered revolutionary in three respects: the measurement of experienced utility using psychologists' tools for measuring subjective well-being, new insights into how human beings value goods and services and social conditions that include consideration of such non-material values as autonomy and social relations, and policy consequences of these new insights that suggest different ways for government to affect individual well-being. In Happiness, Bruno Frey, emphasizing empirical evidence rather than theoretical conjectures, substantiates these three revolutionary claims for happiness research. After tracing the major developments of happiness research in economics and demonstrating that we have gained important new insights into how income, unemployment, inflation, and income demonstration affect well-being, Frey examines democracy and federalism, self-employment and volunteer work, marriage, terrorism, and watching television from the new perspective of happiness research. Turning to policy implications, Frey describes how government can provide the conditions under which people can achieve well-being, arguing that effective political institutions and decentralized decision making play crucial roles. Happiness demonstrates the achievements of the economic happiness revolution and points the way to future research.

The experimental literature and studies using survey data have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. Individuals are concerned about social comparisons. However, behavioral evidence in the field is rare. This paper provides an empirical analysis testing the model of inequity aversion using two unique panel data sets for basketball and soccer players. We find support that the concept of inequity aversion helps to understand how the relative income situation affects performance in a real competitive environment with real tasks and real incentives.

One can be independent, or one can be subject to decisions made by others. This paper argues that this difference, embodied in the institutional distinction between the decision-making procedures ‘market’ and ‘hierarchy’, affects individual wellbeing beyond outcomes. Taking self-employment as an important case of independence, it is shown that the self-employed derive higher satisfaction from work than those employed in organizations, irrespective of income gained or hours worked. This is evidence for procedural utility: people value not only outcomes, but also the processes leading to outcomes.

People care a great deal about their relative economic position and not solely about their absolute economic position. However, behavioral evidence is rare. This paper provides evidence on how the relative income position affectsnprofessional sports performances. Our analysis suggests that if a player’s salary is below the average and this difference increases, his performance worsens. Moreover, the larger the income differences, the stronger positional concern effects are observable. We also find that the more the players are integrated, the more evident a relative income effect is. Finally, we find that positional effects are stronger among high performing teams.

Le mouvement dit du New Public Management, venu tout droit des pays anglo-saxons, a introduit l’idée de gérer les services publics comme des entreprises, et donc d’utiliser des indicateurs de production comme outils de mesure de la performance. Le monde de la recherche n’échappe pas à ce traitement et doit rendre des comptes. L’article ne porte pas tant sur la question de fond de la liberté de la recherche universitaire par rapport à l’Etat que sur les dérives entraînées par ces indicateurs numériques de production auxquels les chercheurs sont aujourd’hui soumis. Non seulement ces méthodes sont inadaptées à la nature de l’activité recherche, mais elles risquent d’avoir un impact négatif sur la créativité même de la recherche. Les coûts de l’obligation du rendu de comptes (démotivation des chercheurs, renforcement de la « science normale », etc.) risquent d’être plus élevés que les bénéfices escomptés. Aussi les auteurs proposent-ils, pour améliorer la recherche publique, d’autres voies qui s’inspirent de la recherche en science de gestion.

Awards in the form of orders, decorations, prizes, and titles are ubiquitous in monarchies and republics, private organizations, not-for-profit, and profit-oriented firms. This paper argues that awards present a unique combination of different stimuli and that they are distinct and unlike other monetary and non-monetary rewards. Despite their relevance in all areas of life awards have not received much scientific attention. We propose to study awards and present results on a vignette experiment that quantifies andnisolates the effects of different award characteristics such as the publicity associated with winning an award. Further, employing a unique data set, we demonstrate that there are substantial differences in the intensity of usage of awards across countries.

This chapter discusses the role of environmental morale and environmental motivation in individual behavior from the point of view of economics and psychology. It deals with the fundamental public good problem, and presents empirical (laboratory and field) evidence on how the cooperation problem can be overcome. Four different theoretical approaches are distinguished according to how individuals’ underlying environmental motivation is modeled. Specifically, we look at the interaction between environmental policy and environmental morale through the lens of cognitive evaluation theory (also known as crowding theory).