IIFT 2020

For the following questions answer them individually

Read the given passage and answer the questions that follow :

The Reverend Jim Jones was the founder and leader of the People’s Temple. In 1978 Jones, facing charges of tax evasion, moved most of his one thousand followers from San Francisco to a small settlement in Guyana, which he named Jonestown. Facing a federal investigation for reported acts of child abuse and torture, Jones decided that his followers should poison their children and then themselves. They prepared vats of poison. A few people resisted; a few others shouted out their protest, but they were silenced. Following Jones’s orders, and the social pressures imposed by one another, mothers and fathers duly poisoned their children. Then they poisoned themselves. Their bodies were found arm in arm, lying together. Econs (and some economists we know) are pretty unsociable creatures. They communicate with others if they can gain something from the encounter, they care abouttheir reputations, and they will learn from others if actual information can be obtained, but Econsare not followers of fashion. Their hemlines would not go up and down exceptfor practical reasons,andties, if they existed at all in a world of Econs, would not grow narrower and wider simply as a matter of style. (By the way, ties were originally used as napkins; they actually had a function.) Humans, on the other hand, are frequently nudged by other Humans. Sometimes massive social changes, in markets and politics alike, start with a small social nudge.

Humans are not exactly lemmings, but they are easily influenced by the statements and deeds of others. (Again by the way, lemmings do not really commit mass suicide by following one another into the ocean. Our widely shared and some what defamatory beliefs about lemmings are based on an all-too-human urban legend—that is, people believe this because they are following other people. By contrast, the tale of mass suicide at Jonestown is no legend.) If you see a movie scene in which people are smiling, you are more likely to smile yourself (whether or not the movie is funny); yawns are contagious, too.

Conventional wisdom hasit that if two people live together for a long time, they start to look like each other. This bit of folk wisdom turns out to be true. (For the curious: they grow to look alike partly because of nutrition—shared diets and eating habits—but much of the effect is simple imitation of facial expressions.) In fact couples who end up looking alike also tend to be happier!

Here, we try to understand how and why social influences work. An understanding of those influences is important in our context for two reasons. First, most people learn from others. This is usually good, of course. Learning from others is how individuals and societies develop. But many of our biggest misconceptions also come from others. When social influences have caused people to have false or biased beliefs, then some nudging may help. The second reason why this topic is important for our purposes is that one of the most effective ways to nudge (for good orevil) is via social influence. In Jonestown, that influence was so strong that an entire population committed suicide. But social influences have also created miracles, large and small. In many cities, including ours, dog owners now carry plastic bags when they walk their dogs, and strolling through the park has become much more pleasant as a result. This has happened even though the risk of being fined for unclean dog walking is essentially zero. Choice architects need to know howto encourage other socially beneficial behavior, and also how to discourage events like the one that occurred in Jonestown. Social influences come in two basic categories. The first involves information. If many people do something or think something, their actions and their thoughts convey information about what might be best for you to do or think. The second involves peer pressure. If you care about what other people think about you (perhaps in the mistaken belief that they are paying some attention to what you are doing—see below), then you might go along with the crowd to avoid their wrath or curry their favor. For a quick glance at the power of social nudges,consider just a few research findings:

1. Teenage girls who see that other teenagers are having children are more likely to become pregnant themselves.
2. Obesity is contagious. If your best friends get fat, your risk of gaining weight goes up.
3. Broadcasters mimic one another, producing otherwise inexplicable fads in programming. (Think reality television, American Idol and its siblings, game shows that come and go,the rise and fall and rise of sciencefiction, and so forth.)
4. The academic effort of college studentsis influenced by their peers, so much so that the random assignments of first-year students to dormitories or roommates can have big consequences for their grades and hence on their future prospects. (Maybe parents should worry less about which college their kids go to and more about which roommate they get.)
5. Federal judges on three-judge panels are affected by the votes of their colleagues. The typical Republican appointee shows pretty liberal voting patterns when sitting with two Democratic appointees, and the typical Democratic appointee shows pretty conservative voting patterns when sitting with two Republican appointees. Both sets of appointees show far more moderate voting patterns when theyare sitting with at least one judge appointed by a president of the opposing political party.

The bottom line is that Humans are easily nudged by other Humans. Why? One reason is that we like to conform.

Read the given passage and answer the questions that follow :

Cultural arguments once loomed large in explanations of the ways in which countries differed economically and politically. Economists mostly abandoned such reasoning in the 20th century, not only because it provided cover for racists but also because of its lack of explanatory power. In 1970 Robert Solow, a Nobel prize winner, quipped that attempts to explain growth with variables such as culture generally ended up “in a blaze of amateur sociology”. This position is changing, however, and not before time. A better grasp of how cultures work may be needed to understand modern political economy.

The responsible intellectual use of cultural argument begins with clear terminology. In "A Culture of Growth", published in 2016, Joel Mokyr, an economic historian at Northwestern University describes culture as a set of beliefs, values, and preferences, capable of affecting behaviour, that are socially (not genetically) transmitted and that are shared by some subset of society". Economists typically treat rational self-interest as the lodestar of human behaviour. But Mr Mokyr recognises that acquired social codes also influence individual choices, and thus broader economic activity. Culture is not immutable, as those who ascribe countries’ diverging fates to deep-rooted cultural attributes often suggest. It evolves as the ideas and influence of different groups shift.

Cultural evolution is essential to the thesis of "A Culture of Growth", which attempts to explain why sustained growth began where and when it did. Mr Mokyr says that factors often credited with kick-starting industrialisation- such as capital accumulation and the cost and supply of certain kinds of labour- may be necessary but are not sufficient. The true catalyst was a continent-wide evolution in beliefs. In Europe between the 16th and 18th centuries, a group of intellectuals often called the “Republic of Letters" groped their way towards a bold new view of nature and knowledge. Francis Bacon, an English intellectual and early contributor to the movement, thought that through disinterested and open inquiry, nature's secrets could be understood and then manipulated to the benefit of humankind. Such views helped nurture the Scientific Revolution and the Enlightenment, but also percolated through society, influencing behaviour. Once the notion became widespread that objective knowledge was possible and could be used to improve people's lives, the emergence of self-sustaining economic growth was near-inevitable.

In a recent essay Enrico Spolaore of Tufts University writes that Mr Mokyr’s ideas show how economists might make better use of culture. He does not simply argue that Europe industrializedfirst because of a particular European cultural way of being. Rather, he identifies a specific cultural change - the rise of an evidence-based, humanistic approach to scientific inquiry - which led to a shift in behaviour that enabled industrialisation. He contrasts this with, for example, China, where rationalistic schools of philosophy such as Mohism were eclipsed in intellectual circles by tradition-venerating Confucianism. China’s fate is not down to something inherent in Chinese culture. Rather, history unfolded one way in one place, and another in another.