Power up: A Cognitive Explanation of Heterogeneity in Preferences for Power - Andrew Wait
Tracks
Room: CBE LT4
Thursday, June 29, 2023 |
5:15 PM - 5:45 PM |
Overview
THE ECONOMICS OF WORKING CONDITIONS II
Convenor: Kieron Meagher
Speaker
Professor Andrew Wait
Professor
University of Sydney
Power up: A Cognitive Explanation of Heterogeneity in Preferences for Power
Abstract
A person’s lived experience, including their culture and upbringing, affects their cognition. This affects how they perceive any given situation. We use differences in cultural norms regarding individualism to explain preference het- erogeneity about power. Using matched employee-establishment data and an international index of individualism, we find causal evidence that inherited indi- vidualism increases the marginal satisfaction from workplace power/authority. To account for endogeneity, we instrument for authority using equivalent em- ployees in a different but similar country. In addition, we instrument for indi- vidualism using a measure of genetic distance from the UK using blood types. These results confirm the relationship between individualism and the marginal utility of power at work. We also include establishment random effects, pay and other individual characteristics. A placebo test confirms the relationship is specific to power rather than other sources of satisfaction.