RAPID: Collaborative Research: The Impact of Trauma on Economic Preferences

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In this RAPID project, the Principal Investigators will examine the effects of trauma from the violence of war on risk aversion and other economic attitudes by conducting economic experiments in Afghanistan. The team has preliminary results showing that Afghans who live near a bombing site, when primed to recall a fearful event, are willing to pay far more for certainty in an economic trade-off than is predicted by mainstream economic theory. This project will extend this work to examine the effects of trauma on all of the "Big 5" core factors that significantly shape economic behavior: tolerance for risk, patience and time discounting, social preferences, competitive propensity, and strategic sophistication. These changes in economic attitude can turn individuals away from otherwise beneficial economic opportunities and, society-wide, harm prospects for recovery. In terms of broader impacts, this research will reveal how exposure to violence can dramatically influence many aspects of an individual's economic decision making. The project will also attempt to demonstrate the potential for simple economic instruments to act as diagnostic tools for economists and policy makers to identify potentially at-risk individuals, especially in transitional economies. While conducted with Afghans, these experiments may shed light on the effects of trauma on anyone exposed to violence, including members of the U.S. military and victims of violent crime. More broadly, this work may show shifts in economic attitudes that can have implications for the development and economic growth prospects of war-torn societies.