Effects of language on economic decision making

The idea that language can affect decisions has been widely studied in the discipline of Psychology and Linguistics over the past half century, but only in the field of Economics in recent years. Some of these studies in Economics have attempted to show that linguistic structures of a language are responsible for certain economic behaviors. However, these studies were empirical and the authors were unable to disentangle the effects of culture that are associated with language from that of linguistic structures. This paper seeks to examine the separate effects of culture and linguistic structure on economic decisions. In our experiments conducted with bilingual subjects, we manipulated the culture and the linguistic structure to examine the effects that each has on social preferences. We do this by using the English and Mandarin language as a prime for culture, and by exploiting the structure of pronoun drop in the Mandarin language. Our results reveal that the linguistic structure of pronoun drop is significant in altering one’s social preferences, even after controlling for demographics and language background. Culture, on the other hand, was found to have an insignificant effect on social preferences. These results are significant in providing a deeper insight into the effects of language on decisions, and practical implications include achieving desirable behaviors in various social domains through the manipulation of linguistic structure.Bachelor of Art