CeDEx 2014-11: Leaders as Role Models for the Voluntary Provision of Public Goods

Summary

Field evidence on charitable giving, tax evasion, the abuse of the welfare state, criminal behaviour, corruption, and corporate culture, suggests that people’s own behaviour in these domains depends strongly on their beliefs about how others will behave. Leaders – politicians, government officials, and managers – may serve as role models for what is considered appropriate and may thus shape their followers’ beliefs about the behaviour of others. For instance, leaders who behave too selfishly, evade taxes, consume unwarranted privileges, accept bribes, etc. may induce people to do the same and may nurture people’s beliefs that other people will do the same. This may exacerbate the problem to the extent that people’s behaviour is not only shaped by the leader’s example but also by their beliefs about other people’s actions. Of course, if the leader behaves as a positive role model, the opposite conclusions may hold.

In this Nottingham School of Economics working paper Gächter and Renner test this intuition. They investigate the link between leadership, beliefs and pro-social behaviour in a series of public good experiments. They find that leaders strongly shape their followers’ beliefs. In this sense, leaders are ‘role models’. This is particularly important at the beginning of the relationship. In later periods followers’ beliefs are not only determined by what the leader did in the present period but also by what other followers did in the past. Moreover, when forming beliefs for the current period followers put more weight on average on the other followers’ past behaviour than on the leader’s current behaviour. This leads to a strong path dependency that the leader can hardly correct. The observation of path dependency contributes to an explanation for why it is so difficult to fight corruption, tax evasion, and welfare fraud and why corporate cultures are hard to change. Once a norm of cooperation is destroyed, leaders have a hard time re-establishing it because followers are more strongly impressed by their beliefs about other followers than about the leader’s behaviour. Gächter and Renner discuss the implications for understanding belief effects in naturally occurring situations.

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CeDEx Discussion Paper 2014-11, Leaders as Role Models for the Voluntary Provision of Public Goods by Simon Gächter and Elke Renner, October 2014

Authors

Simon Gächter and Elke Renner

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