Funding Opportunity: Behavioral Economics
The Russell Sage Foundation's program on Behavioral Economics supports innovative research that uses behavioral insights from psychology and other social sciences to examine and improve social and living conditions in the United States. We seek investigator-initiated research proposals that will broaden our understanding of the social, economic and political consequences of real-life behaviors and decisions that deviate from the neoclassical economic standards of rationality. RSF is especially interested in behavioral economics research that contributes to our understanding of topics of interest under its other programs—Future of Work; Race, Ethnicity and Immigration; Social Inequality.
The following examples illustrate, but do not exhaust, the topics and types of research the foundation would be interested in supporting:
Poverty, Inequality and Mobility
Recent studies find that poverty and other forms of resource scarcity burden people's mental capacities and leave less 'mind' for other concerns. What does it mean for people's lives and their ability to function and make decisions? Behavioral insights may give us a better understanding of how financial scarcity, and individuals’ responses to it, affects their lives. For example, in Scarcity: Why Having Too Little Means So Much (2014), Mullainathan and Shafir show that scarcity creates a distinct psychology for everyone struggling to manage with less than they need, including why the poor and those maxed out on credit cards may fail to manage their money, and contribute to persistent poverty.
Public perceptions about inequality and mobility are often inaccurate. For example, Ariely and Norton (2011) show that there is a significant difference between what Americans think the distribution of wealth is (somewhat even), what they would prefer (more even than socialist Sweden), and how wealth is actually distributed. Behavioral insights may help us understand why individuals misperceive information, the consequences of such biases, and how these misperceptions might be corrected.
Compared to other fields, the progress in applying behavioral insights to labor economics has been more uneven and scattered. In the early days, Kahneman, Knetsch and Thaler (1986) provided survey evidence on notions of fairness which could justify the observed wage compression in several industries. Further, Thaler (1989) found that behavioral factors could help understand puzzling features of inter-industry wage differentials.More recently, Shapiro (2005) finds high impatience among food-stamp recipients, implying a significant preference for immediate consumption. Oreopoulos (2007) provides evidence of high impatience among students who drop out of school, forgoing high future returns of schooling. In the job search realm, DellaVigna et al. (2014) observe that newly unemployed individuals search hard for a job in response to loss of income, but over time, they may get used to the lower level of income and search less. They then search hard again in anticipation of unemployment benefits being cut, but ultimately may get use to this as well (reference dependence with a backward looking reference point).
Parenting and Child Development
Resource scarcity may also influence parenting and child development. Research shows that the gaps in children’s achievement and behavior are due in part to the differences in parenting in rich and poor families. Using insights from behavioral economics, Gennetian et al. (2014) examine ways in which small design features of interventions (e.g. opt-in defaults, reminders, social norm messaging) can be adjusted to augment the impacts of early education and care initiatives, potentially improving parent engagement and children's developmental outcomes, especially for lower-income families.
Research in behavioral science offers insights into the difficulty of behavior change. For example, decisions that involve tradeoffs between costs and benefits occurring at different times (i.e., intertemporal choices) and the tendency to over-value immediate rewards at the expense of long-term intentions (i.e., present bias) may make it hard for parents to give up leisure (or work) today in order to invest time and effort for a distant return in children’s human capital. Kalil (2014) uses behavioral insights to better understand what motivates parents to invest in their children and to inform the design of policies to reduce inequality in children’s skill development. Research by Andreoni and Sprenger (2012) also shows that for low-income parents a tendency to discount the future may arise from uncertainty about whether the time and effort they spend on their children will help their child succeed.
Racial and Ethnic Bias
Recent studies have documented the existence of in-group racial biases in employment, criminal, judicial and educational settings. While social and legal changes have eliminated many institutionalized forms of racial discrimination, the same policy tools may have less leverage against implicit racial stereotypes. For example, Bertrand and Mullainathan (2003) provide evidence that race affects the benefits of a better resume—for Caucasian names, a higher quality resume elicits 30 percent more callbacks whereas for African American names, it elicits a far smaller increase—suggesting that racial discrimination is still a prominent feature of the labor market. In another study, Pope et al. (2014) show that individual NBA referees became unbiased after being made aware of their racial biases in referee calls of personal fouls through widespread media exposure, suggesting that raising awareness of even subtle forms of racism can bring about meaningful change.
Behavioral insights have played the most obvious role in finance, where behavioral finance has become its own thriving field. A better understanding of human behavior may provide a more useful framework for analyzing public finance issues, such as social insurance, income support and redistribution, and taxation. For example, in Policy and Choice (2011), Congdon, Kling, and Mullainathan explore how psychological factors, like framing, help reshape key concepts in public finance, such as moral hazards (e.g. unemployment insurance muting the incentives of unemployed individuals to return to work) and deadweight loss (e.g. taxation). More recently, Chetty et al. (2014) use Danish administrative wealth data to show that defaults are a more effective way to increase savings rates than changes in tax subsidies.
Choice architecture describes the different ways in which options can be presented to consumers, and the impact of that presentation on decision-making. For example, in Nudge: Improving Decisions About Health, Wealth, and Happiness (2009), Thaler and Sunstein show how choice architecture can successfully nudge people toward better decisions. More recently, Johnson et al. (2013) examine how well people make choices, how well they think they do, and what can be done to improve these choices in the new health insurance exchanges. They show that performance can be improved by providing calculation aids and by choosing a "smart" default.
All applicants (both PIs and Co-PIs) must have a Ph.D. or comparable terminal degree, or a strong career background that establishes their ability to conduct high-level, peer-reviewed scholarly research. RSF particularly encourages early career scholars to apply for Presidential awards. All nationalities are eligible to apply and applicants do not have to reside in the U.S. RSF does not accept applications for Project and Presidential Awards from doctoral or other graduate students, unless specified in a special RFP.
Letter of Inquiry:
All applications for external awards must be preceded by a brief letter of inquiry (No more than 4 pages, excluding references, single-spaced, with standard 11 or 12-point font, and 1 inch margins) to determine whether the Foundation's present interests and funds permit consideration of a proposal for research. Letters of inquiry should be treated as "mini proposals." They must include the research questions to be addressed, the research design, data sources and analytic strategy, the qualifications and responsibilities of persons engaged in the research, and a brief overview of the estimated budget. Letters of inquiry should also be clear as to how the proposed project fits within the Foundation's core interests. Letters must be submitted through our online portal directly by an eligible principal investigator or co-principal investigator (graduate students and university administrative staff are not eligible to submit applications).
Only invited proposals will be considered. Proposals can be a maximum of 20 double-spaced pages (with standard 11 or 12-point font and 1 inch margins). This 20-page limit does not include (1) references, (2) supporting tables and figures, (3) appendices and, (4) the budget. Within the 20 pages, applicants must substantively answer the following questions:
- What is the problem under study and why is it important?
- What does the literature (across disciplines) say about this problem and what unique contribution(s) does this study make?
- What are the principal hypotheses or questions that will be examined?
- What kinds of data will be used in the study and how will the data be acquired?
- How will the data be analyzed to inform the questions under study: what research methods, analytic models, or interpretive strategies will be used?
- What is the project work-plan? The work-plan should specify the timeline and important milestones and goals during the course of the project (the work-plan can serve as a gauge of project progress when submitting interim reports to the Foundation).
- What are the qualifications and responsibilities of the person(s) engaged in the research?
- Is there a budget justification or narrative that succinctly explains and clarifies the requested budget? (the budget narrative must be included in the proposal iteself)
- In addition to describing the budget categories, the budget narrative must also include a section on current and pending support from other internal or external sources relevant to this proposal. Please describe the total amount of funds you currently have from other sources and the amount of funds that are pending in requests to other sources that are related to the proposed project. The start and end dates of these existing or pending grants must also be noted. Please also specify the number of months of salary support that the PI (and co-PIs) have from current and pending requests. Finally, describe how the resources you are requesting from the Russell Sage Foundation are related to these other grants.
- When salary support is requested, applicants must provide a detailed justification for the tasks and time efforts of all investigators. When more than 3 investigators are requesting funding, the budget narrative must explain the expertise those additional individuals bring to the project.
- How will the results of the investigation be reported (e.g., conference presentations, articles, books, policy reports, blogs, opinion pieces, summary reports)?
- If data collection is proposed, we require that you send a copy of your (draft) data collection instrument as an appendix to the proposal.
Review Process and Award Decisions:
The Foundation employs a rigorous multi-disciplinary review process at every stage of the application process. All letters of inquiry and proposals submitted to RSF are reviewed by program staff, external reviewers from multiple disciplines selected specifically for their expertise, members of one of the standing Advisory Committees, or some combination of these. In the case of Project Awards, final funding decisions are made by the Board of Trustees at our March, June and November Board meetings.
Funding is available for secondary analysis of data or for original data collection. We are especially interested in novel uses of existing data, as well as analyses of new or under-utilized data. Proposals to conduct laboratory or field experiments, in-depth qualitative interviews, and ethnographies are also encouraged. Smaller projects might consist of exploratory fieldwork, a pilot study, or the analysis of existing data.
The foundation encourages methodological variety and inter-disciplinary collaboration. All proposed projects must have well-developed conceptual frameworks and research designs. Analytical models must be specified and research questions and hypotheses (where applicable) must be clearly stated.
Awards are available for research assistance, data acquisition, data analysis, and investigator time for conducting research and writing up results. Applications should limit budget requests to no more than a two-year period, with a maximum of $150,000 (including overhead) per project. Projects that use publicly available data are capped at $75,000, including overhead. Presidential Awards, with a maximum budget of $35,000 (no overhead allowed) are also available. Our website lists upcoming deadlines and provides detailed information about submitting letters of inquiry, proposals and budgets.
For more information please click "Further Official Information" below.