In Allison Pearson's funny-sad best-selling novel I Don't Know How She Does It, the main character, Kate Reddy, a mother of two and an investment fund manager for the firm EMF, is assigned "a final [sales presentation] for a $300 million ethical pension fund account" in America. She is informed, "They want us to field a team that reflects EMF's commitment to diversity. . . . So I reckon that's gotta be you, Kate, and the Chinky (the newly appointed Momo) from research" (Pearson 2002, 123). Later, Kate tells the reader, "And of course I told Momo . . . how to compare screening criteria, and a dozen other things, but it was like asking a skate-boarder to dock a space station" (130). At the final a question is raised: "Ms. Reddy, New Jersey has recently signed up to the McMahon Principles. Would that be a problem for your asset collection?" (154). Kate has never heard of the principles. A would-be lover at the meeting comes to the rescue: "I think we can feel confident . . . that with Ms. Reddy's wide experience of ethical funds she would be up to speed with employment practices of companies in Ireland." Kate capitalizes on the situation, commenting: "As Mr. Abelhammer says, we have a team that screens for employment policies. On a personal note, I'd like to add I am fully behind the McMahon Principles, being Irish myself"—a half-truth (155).

In neoclassical economics the decision to evade tax is analysed in the same way as the decision to commit benefit fraud. Both decisions depend on the net expected utility that a 'representative individual' will derive from the gamble. If the financial loss a community experiences when there is tax evasion is equal to the financial loss experienced when there is benefit fraud, there is no reason to expect any difference in individuals' attitudes towards these crimes. However, in practice, individuals are far more condemnatory of benefit fraud than of tax evasion. Prospect theory is applied to explain this difference of attitude as well as why individuals are more likely to commit tax evasion than benefit fraud. Moreover, when comparing attitudes and behaviour towards public finance crimes in different countries, the salience of the public finances in individuals' lives, together with the perceived prevalence of illegal behaviours, is important. A comparison of attitudes in Italy and in the UK indicates that Italians are more likely to more heavily punish these crimes and to commit these crimes. The present study sheds insight when explaining why 'gamekeepers' who call for the harshest punishments are the individuals who are more likely to act as 'poachers' themselves. There is a distinction between what individuals wish for themselves in a 'private-person' role and what they wish for others in a 'public-citizen' role - would-be poachers are harsh gamekeepers. (C) 2015 Elsevier Inc. All rights reserved.

Economic psychology has traditionally focused on tax evasion, neglecting other "public finance" offences such as benefit fraud; the present paper, therefore, aims to perform a first exploratory study on this subject. Questionnaire data collected from a sample of Italian and English students show that, considering an equal economic value, tax evasion and benefit fraud are perceived differently. In particular, participants tend to be more strict with benefit fraud and more lenient with tax evasion; moreover, tax evasion is perceived as a less serious offence compared to other illicit behaviours (including non-fiscal offences). Also, several differences were found comparing two different cultural contexts (Italy and UK). Finally, the article highlights strengths, limitations and future directions of the study.

In a study by Shalvi, Dana, Handgraaf, and De Dreu (2011) it was convincingly demonstrated that psychologically, the distinction between right and wrong is not discrete, rather it is a continuous distribution of relative 'rightness' and 'wrongness'. Using the 'die-under-the-cup' paradigm participants over-reported high numbers on the roll of a die when there were financial incentives to do so and no chance of detection for lying. Participants generally did not maximise income, instead making moral compromises. In an adaptation of this procedure in a single die experiment 9% of participants lied that they had rolled a '6' when they had not compared to 2.5% in the Shalvi et al. study suggesting that when the incentive is donation to charity this encourages more dishonesty than direct personal gain. In a follow-up questionnaire study where sequences of three rolls were presented, lying increased where counterfactuals became available as predicted by Shalvi et al. A novel finding is reported where 'justified' lying is more common when comparative gains are higher. An investigation of individual differences revealed that economics students were much more likely to lie than psychology students. Relevance to research on tax evasion, corporate social responsibility and the 'credit crunch' is discussed. (C) 2012 Elsevier B.V. All rights reserved.

Financial capability requires understanding measures of consumer credit cost and using them appropriately in credit judgements and decisions. In three studies, UK adults' under-standing and use of credit cost and duration information were investigated from a bounded rationality perspective. Study 1, part of a representative survey of UK adults (N = 1000), found that when presented with annual percentage rate (APR) participants significantly overestimated the total cost (TC) of a 12-month loan. In Study 2, loan duration and APR were varied in an independent groups experiment (N = 242). Bank customers' TC estimates were sensitive to both loan duration and APR but TC was again substantially overestimated. Study 3 was an independent groups experiment investigating the effect of APR and TC information on credit decisions (N = 241). APR often influenced decisions between loans varying in duration and monthly repayment, but this effect was moderated by TC information. It was concluded that: (1) people generally misunderstand the relation between APR and TC: and (2) although APR information can have a large effect on credit decisions, its effect is either attenuated or amplified by TC information. The findings are interpreted in terms of a 'take the best APR' heuristic and a dual mental account model of instalment credit. Recommendations for improving credit information provision and financial education are offered. (C) 2011 Elsevier B.V. All rights reserved.

National design policies don't follow a predetermined format. They depend heavily on the economic and political realities of the countries in which they are born. Nevertheless, this article argues that such policies—national design systems—are more likely to be successful than isolated initiatives, which tend to duplicate efforts and tackle only one part of a problem.

Sustainable investment (SI), which integrates social, environmental and ethical issues, has grown from a niche market of individual ethical investors to embrace institutional investors (e.g. pension funds) resulting in £764 billion in assets under management in the UK alone [Eurosif, 2008 : ‘European SRI Study 2008’ (Eurosif, Paris)]. Explaining this growth is complex, involving shifts in personal and collective values, reactions to corporate scandals, scientific and media pronouncements about climate change, Government initiatives, responses from financial markets and the influence of SI innovators in The City of London. The article examines the influence of human agency through interviews with 14 SI champions who have variously been responsible for launching SI funds and changing investment processes and organisational structures in order to enhance SI. Interviewees were asked about their motivations and persuasive strategies, the obstacles they faced and how they overcame them as well as broader implications of SI for financial markets. The following key categories inform the results and the discussion: Values; Conservatism, Antipathy and Incredulity; Optimism and Sympathy from Insiders; The Social and Political Context; The Business Case; Organisational Constraints; Inappropriate forms of Remuneration; Short-termism; The Nature of Capitalism. Three discourses were also identified. The first is the necessity to make a business case for SI; the second is the benefits that SI can bring to the quest of overcoming short-termism; the third is a belief that for SI to have a significant influence, greater government intervention is required.

Two economic interpretations of the credit crunch are outlined and the question posed whether these are incommensurate ideological positions. Psychological perspectives are then explored including insights from cognitive and social psychology. The argument is made that policy options depend on what constitutes the ‘good society’ and whether the culture of financial institutions can be changed by government intervention, social pressure and human agency. It is concluded that those interested in socio-economics have a duty to engage with alternative discourses.

Behavioural influences of personal carbon trading (PCT) beyond those anticipated by pure price effects have been a theoretically attractive, yet empirically elusive, feature of such schemes. Computer-based simulation is used to examine the effects of participants' decisions on their personal carbon allocations within a PCT context. Evidence is presented about participants' tendencies to make more energy-conserving decisions as a consequence of attending to a restrictive and diminishing carbon allowance - independent of other financial and carbon cost information provided suggesting that a form of 'carbon budgeting' is occurring. Further measurements indicate that the extent of carbon reduction achieved within the simulated PCT framework varies according to pro-environmental attitudes. Evidence is also presented that the size of participants' footprints correlates inversely with support for PCT; and that pro-environmental attitudes correlate positively with support for PCT. The advantages and drawbacks of using simulations for examining behavioural responses to PCT are discussed.

It is understandable in times of financial crisis that the general public asks how this could happen. And since the market actors appear so irrational, it is also understandable that people – lay people and experts alike – believe that “psychological” factors play a decisive role. Is there evidence for this and what is the evidence? It is true that in general people individually use their cognitive and other resources in sensible ways, and that they collectively have developed institutions that effectively regulate economic and other transactions. It is likewise true that extreme circumstances sometimes are beyond people´s capacity, individually as well as collectively. It is therefore essential that scientific knowledge of people´s cognitive and other limitations is brought to bear on the issue of how to prevent such extreme circumstances to occur. Arguably, financial markets such as those for stocks and credit overtax actors’ capacity to make rational judgments and decisions. In product markets with full competition, prices represent the true value of the products offered. This does however not hold in stock markets where stock prices, due to excessive trading, are more volatile than they should be if reflecting the true value of the stocks. Psychological explanations include cognitive biases such as overconfidence and overoptimism, risk aversion in the face of sure gains and risk taking and loss aversion in the face of possible losses, and influences of nominal representation (money illusion) of stock prices. If no cognitive biases (strengthened by affective influences) exist or only some actors are susceptible to such biases, individual irrationality in stock markets would be eliminated. This is however not what evidence indicates. Still, in order to understand stock market booms and busts, it is necessary to take into account the tendency among actors to imitate each other. In de-stabilized stock markets, experts are less likely to loose money than lay people who lack skill in constructing stock portfolios that effectively diversify risk. Credit markets allow people to lend money for investments that will pay off in the future. Yet, under extreme circumstances credit lenders offer loans without appropriately considering the risk borrowers run of not being able to pay back installment rates. Global credit excesses in general, and the current sub-prime mortgage crisis in particular, also show that households often accept risky loans. Furthermore, their preparedness to use credit has been increasing and credit is no longer solely a means of investing in the personal future. An example is that, in the new member states of the European Union, citizens having a desire for a Western living standard are increasingly prepared to use credit. Credit use is a process consisting of different stages of decision making, starting with purchasing a product for borrowed money and ending with paying back the borrowed money. Decisions to save now in order to buy a desired product in the future, or not to save but to borrow money and save later, are intertemporal choices with consequences at different points in time: The rewards of possessing a commodity immediately or in the future are traded off against the costs of paying back borrowed money by installment rates or paying the price at once in the future. Purchase decisions involve two interacting choices preceded by information search: Choice of the product and choice of the method of financing. In contrast to search of information about the product, only a small percentage of credit users search extensively for credit information prior to credit take up. The probability of search increases with the borrowed amount, the amount of previously experienced debts, higher income, educational level, and for credit novices. Furthermore, credit users fail to correctly anticipate the decrease in the experienced pleasure from the credit-financed product. They also experience decreasing pleasure with the acquired product and increasing strains with the continuing payments. In order to deal with this hedonically unsatisfactory state, credit users are tempted to borrow again, and thus possibly slide into problem debt. There is also a reciprocal interaction between the pleasure derived from consumption and the pain associated with paying. As long as a purchased product is not fully paid, pleasure of consumption would be attenuated by painful thoughts about the remaining payments. Therefore, loan payments would become progressively less burdensome if the outstanding debt balance and the associated pain are shrinking more quickly than the benefits of consumption. If payment and consumption are mentally coupled, credit financing would only be accepted for long-lasting goods that slowly depreciate in value, so that the pain of paying is buffered by the benefits derived from the consumption of the product. In coping with economic hardship caused by financial crises and economic recessions, households use a hierarchy of tactics for adjustment, including buying cheaper, buying less, buying higher quality (more enduring products), and buying fewer (or selling) durables. Since the last implies life-stylechanges it is a last resort even though it would be the most effective way of coping. Younger people are more flexible than older people. Yet, older people, who have experienced economic recessions before, are better able to cope than younger people without such an experience. Pessimistic people and people in lower socioeconomic strata adjust by buying less, whereas optimistic people and people in higher socioeconomic strata continue their consumption and lifestyle by buying higher quality and enjoying more enduring products. People should be taught budgeting and “mental accounting” techniques to become aware of the possibilities of curtailment by taking account of their spending on a variety of expense categories. The use of credit cards makes mental accounting more difficult and should therefore be discouraged. Implementation of counter-measures is however not easy. There are large differences between people in financial knowledge related to age, gender, level of education, and occupation. Most people furthermore dislike to think about and to compare financial products. Many people even lack the motivation to acquire the knowledge about financial products and procedures needed to function in a complex financial world, where they increasingly become responsible themselves and can rely less on the government for protection and support. A detrimental consequence of financial crises is the loss of trust in financial institutions. Seven determinants of trust (and regaining trust) in financial institutions are discernible: competence, stability, integrity, benevolence, transparency, value congruence, and reputation. The first four are necessary pre-conditions or “dissatisfiers” that bring trust from negative to neutral. The last three are “satisfiers.” Achieving some or all three would bring trust from neutral to positive. Some argue that asset bubbles are started by greed fuelled by overconfidence and optimism (as well as low interest rates and inexpensive credit), “madness of crowds” and self-fulfilling prophecies encouraging people to do things they would not do on their own. This results in momentum buying where “real” value becomes irrelevant. It therefore seems fruitless to outlaw mass financial euphoria if it were imbedded in the “human psyche.” One may ask how financial institutions can be changed to become more responsible. An example is the inclusion of long-term environmental, social, and corporate governance considerations within investment processes to achieve both financial and social outcomes. This requires removal or change of conventions that favour remuneration systems based almost entirely on short-term performance. Making required cultural shifts is however no easy matter but because people in any group, including those in financial institutions, are not entirely homogeneous, minorities of open-minded, socially responsible thinkers exist and now perhaps is the time when they are more likely to be listened to. A policy-relevant insight is that whereas increasing material wealth in already affluent societies has small effects on citizens’ life satisfaction, shrinking material wealth in times of economic crises and recessions may have a more profound effect. In affluent societies preventing shrinking material wealth should therefore have higher priority than increasing material wealth.

Five hundred and five Italian psychology and economics students took part in a tax compliance study testing the influence of detection rates (within subjects) and the between subjects variables of framing effects, instructions to behave instrumentally or not, degree choice and gender. The sample was an improvement on a previous study conducted in the UK where the effects of gender and degree choice were entangled. The results from the Italian sample showed highly significant effects for detection rates, framing effects, gender and degree choice. Participants declared more as detection rates rose and when tax was framed as a gain. Males and economists declared the least. The instruction to maximise income (instrumentality) encouraged psychologists to declare less, while economists behaved instrumentally whether they were asked to or not. The influence of culture was examined by comparing the two data sets. Although the tax systems of these two countries are very similar, tax evasion is much more common in Italy. As anticipated Italian students declared less than UK students and the results for the Italian sample were more pronounced (e.g. the significant framing effect) but otherwise all are in the same direction. Theoretical and practical implications are discussed as the prospects for future empirical studies.

Strategies aimed at reducing land use conflict often stress the need to make planning decisions more democratic. However, this goal is obstructed by overly-narrow conceptual perspectives that neglect the symbolic significance of place. We illustrate this by examining place names, which function as repositories of socio-political meaning. Drawing on elements of discursive and rhetorical psychology and subject positioning theory, we investigated the variety of meanings associated with place names in the context of a proposed housing development in Swindon, in the South of England. Thirty interviews with different stakeholders were conducted to gauge their opinions towards the proposal. Noting differences in the way the proposed site was named, we analysed the range of meanings associated with each name in relation to participants' stances towards development. Our results show how, in naming place, spatial meanings are negotiated and contested in ways that support contrasting political objectives. We conclude that planning professionals should exercise greater sensitivity towards existing spatial meanings, especially place names. In addition, socio-political understandings of subjective spatial relationships can serve as a basis for achieving more productive dialogue and improving development designs. Copyright (C) 2009 John Wiley & Sons, Ltd.

The present study identifies the strategies that individuals committed to the cause of Sustainable Investment (SI) use when attempting to persuade institutional investors (e.g., pension funds) to invest in socially and environmentally responsible ways. This article is based on interviews with 15 pioneers of the SI movement in the United Kingdom. Building on the literature on issue-selling, green championship, and corporate social responsibility, this study identifies four tactics that pioneers have employed to "sell" SI in investment institutions: making the business case for SI; forming internal coalitions with mainstream investment professionals; industry networking; gaining credible expertise. The results also suggest that market short-termism and internal organizational contexts dominated by a lack of moral engagement and disempowerment of SI teams are factors that impede champions' efforts. The article opens new avenues for research and recommends ways in which organizational and institutional impediments to SI may be overcome.

For more than 15 years, the investment community and the academic community have written extensively on socially responsible investment (SRI). Despite the abundance of SRI thought, the adoption of SRI practices among institutional investors is a comparative rarity. This paper endeavours to achieve two goals. First, by integrating the practitioner and academic literature on the topic, the paper attempts to identify the many impediments to SRI in Europe from an institutional investor's perspective. Second, the paper proposes a unitary framework to conceptually organize the impediments to SRI by using insights from different relevant research perspectives: behavioural finance, organizational behaviour, institutional theory, economic sociology, management science and finance. The paper concludes by presenting the main shortcomings within both the academic and the practitioner literature on SRI and by providing conceptual and methodological recommendations for further research.

Part I. Introduction, Theory and Method: 1. Introduction Alan Lewis 2. Theory and method in economics and psychology Denis Hilton Part II. Finance: 3. The economic psychology of the stock market Karl-Erik Warneryd 4. Stock prices: insights from behavioural finance Werner F. M. De Bondt 5. Inter-temporal choice and self-control: saving and borrowing Paul Webley and Ellen K. Nyhus 6. Financial decisions in the household Carole Burgoyne and Erich Kirchler 7. Corporate social responsibility: the case of long term and responsible investment Danyelle Guyatt Part III. Consumer Behaviour in the Private Sector: 8. Consumption and identity Russell Belk 9. Wealth, consumption and happiness Aaron Ahuvia 10. Comparing models of consumer behaviour Gerrit Antonides Part IV. Consumer Behaviour in the Public Sector: 11. Lay perceptions of government economic activity Simon Kemp 12. How big should government be? John G. Cullis and Philip R. Jones 13. Integrating explanations of tax evasion and avoidance Valerie Braithwaite and Michael Wenzel Part V. Environment: 14. Sustainable consumption and lifestyle change Tim Jackson 15. Environmentally significant behaviour in the home Paul C. Stern 16. Economic and psychological determinants of car ownership and use Tommy Garling and Peter Loukopoulos 17. Environmental morale and motivation Bruno S. Frey and Alois Stutzer 18. Contingent valuation as a research method: environmental values and human behaviour Clive L. Spash Part VI. Biological Perspectives: 19. Neuroeconomics: what neuroscience can learn from economics Terry Lohrenz and P. Read Montague 20. Evolutionary economics and psychology Ulrich Witt 21. Evolutionary psychology and economic psychology Stephen E. G. Lea.

Part 1: Introduction to the Volume 1. Developing Alternative Frameworks for Explaining Tax Compliance James Alm, Jorge Martinez-Vazquez, and Benno Torgler Part 2: A Review and a Critique of the Existing Literature 2. Why Pay Taxes? A Review of Tax Compliance Decisions Erich Kirchler, Stephan Muehlbacher, Barbara Kastlunger, and Ingrid Wahl Part 3: Expanding the Standard Theory of Compliance 3. Tax Compliance: Social Norms, Culture and Endogeneity John Cullis, Philip Jones, and Alan Lewis 4. Vertical and Horizontal Reciprocity in a Theory of Taxpayer Compliance Jan Schnellenbach 5. Tax Evasion and the Psychological Tax Contract Lars P. Feld and Bruno S. Frey Part 4: Empirical Evidence on Financial Incentives 6. A Meta-Analysis of Incentive Effects in Tax Compliance Experiments Calvin Blackwell 7. Econometric Models for Multi-Stage Audit Processes: An Application to the IRS National Research Program Brian Erard and Jonathan S. Feinstein Part 5: Empirical Evidence on Governance 8. Tax Compliance, Tax Morale and Governance Quality Benno Torgler, Markus Schaffner, and Alison Macintyre 9. Tax Evasion, Corruption , and the Social Contract in Transition Eric Uslaner 10. Procedural Justice and the Regulation of Tax Compliance Behavior: The Moderating Role of Personal Norms Kristina Murphy Part 6: Case Studies 11. Tax Non-Compliance Among the Under-30s: Knowledge, Obligation or Skepticism? Valerie Braithwaite, Monika Reinhart, and Michael Smart 12. The Economic Psychology of Value Added Tax Compliance Paul Webley and Julie Ashby 13. Tax Evasion, the Informal Sector, and Tax Morale in LAC Countries James Alm and Jorge Martinez-Vazquez