Inequality across people in income, wealth and many other outcomes arises from differences in circumstances and differences in behavior. Much economic research on the causes of inequality focuses on circumstances. CEBI focuses on the role of individual behavior in generating unequal outcomes. Understanding the role of behavior is fundamental for obtaining a better understanding of the sources of inequality, how policy affects inequality, and how circumstances and behavior interact to reduce or produce inequality.
The research agenda requires a comprehensive collection of data and exploits the globally unique Danish data research infrastructure. It enables the researchers to study a large number of choices and outcomes of individuals, using administrative register data covering the entire population over a period of more than thirty years, and to combine it with information about their behavioral characteristics obtained from large-scale controlled experiments and large-scale surveys.
As an example, a hypothesis from economic theory is that patient people save more and become more wealthy than impatient people. To test this hypothesis, the researchers use controlled experiments to elicit the degree of patience and combine this data with administrative data providing information on real-life wealth in order to analyze whether more patient people are more wealthy.
Watch video with Thomas Piketty here