08.12.2025 r. seminar: Hitting Rock Bottom: Economic Hardship and Cheating

INE PAN and GRAPE invite you to a seminar by Professor Edward Miguel (UC Berkeley). The seminar will take place on December 8th from 1 p.m. in room 2301 at the Palace of Culture and Science.

“Hitting Rock Bottom: Economic Hardship and Cheating”

Livia Alfonsi (Harvard), Michal Bauer (CERGE-EI Charles University), Julie Chytilová (CERGE-EI Charles University) and Edward Miguel (University of California, Berkeley)

This paper investigates whether economic hardship undermines preferences for honesty. We use controlled, incentivized measures of cheating for private benefit in a large, diverse sample of 5,676 Kenyans, exploiting three complementary sources of variation: experimentally manipulated monetary incentives, a randomized increase in the salience of one’s own financial situation, and the Covid‑19 income shock (exploiting randomized survey timing, with respondents being surveyed before vs. during the crisis). We find that severe economic hardship—marked by a 50% drop in monthly earnings—leads to a sharp increase in the prevalence of cheating, from 43% to 72%. Cheating behavior is highly responsive to financial incentives and increases gradually with prolonged hardship. The effects are largest among the most economically impacted and are amplified when the salience of one’s own financial situation is experimentally increased. Predictable seasonal income fluctuations, in contrast, do not affect honesty. The results demonstrate that while most individuals exhibit a strong preference against cheating under normal conditions, economic hardship substantially erodes honesty.