Andreas Piechl, ifo Center for Macroeconomics and Surveys - Attitudes towards private and public debt: Does language matter?

Title: Attitudes towards private and public debt: Does language matter?

Abstract: Previous literature has studied the effect of language on economic behavior. A key challenge for identifying the causal effect of language is that unobservable factors may mask the effect of language on individual decision making. We aim to understand whether language can causally affect people's attitudes towards private and public debt. To do so, we provide different set of empirical results: First, descriptive evidence along the language border running through Switzerland, second, causal evidence from an online survey experiment (RCT) in Austria, Germany, Switzerland, the Netherlands, Sweden, as well as in three countries which have English as an official language (Australia, UK, US). The experimental component of our research design consists of the randomisation of wording in our two outcome questions about private and public debt. We exploit the fact that the commonly used word for "debt" also means "guilt" in German, Dutch and Swedish, in order to explore how respondents' attitudes towards private and public debt are affected if those negatively connotated words are substituted with neutral ones. Third, we provide evidence that language is strategically used in the political arena using natural language processing and machine learning techniques on parliamentary speeches and newspaper articles. Our results confirm our main hypothesis that the use of neutral words triggers higher approval for private and public debt than the negatively connotated ones in German speaking countries while we do not find such effects in the three countries which have English as an official language.

Presenter: Andreas Peichl, ifo Center for Macroeconomics and Surveys

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