Masao Ogaki - Retiring in AY2023

After living in the United States for 25 years since I first went there to study at the University of Chicago's graduate school, I returned to Japan in September 2009 to take up a position as a professor in the Faculty of Economics at Keio University. In April 2010, I launched a seminar in behavioral economics and a lecture course titled "International Economics and Behavioral Economics." At that time in Japan, behavioral economics was gaining attention after Daniel Kahneman, whose research built the theoretical foundation of modern behavioral economics, won the Nobel Prize in 2002, and The Association of Behavioral Economics and Finance was established in 2007. However, most Japanese universities had not yet begun to offer classes and seminars in behavioral economics. Although many interesting books for the general public had been published in both Japanese and English, there were still no satisfactory textbooks suitable for lectures. So, while teaching at Keio University, I wrote my own textbooks in both Japanese and English. The neuroeconomics sections of these textbooks required expertise in neuroscience, so I asked Dr. Saori Tanaka, an expert in the field, to co-author them. Today, many universities in Japan offer courses in behavioral economics, and several excellent textbooks have been published. It feels like a different era.

At the University of Chicago, I studied traditional economics, which is based on the premise of the utility-maximizing *Homo economicus*, and until 2003, my research was in traditional economics. The catalyst for me to begin researching behavioral economics—which explores how scarce resources are and should be distributed, targeting *Homo sapiens* rather than assuming *Homo economicus*—was the September 11 attacks in the United States in 2001. In 2000, while living with my family of four in Ohio, we took a family trip to New York and stayed at the Marriott Hotel next to the World Trade Center. When I saw footage of the Marriott Hotel collapsing in the attack, I felt intense hatred, thinking, "The terrorists are trying to take my family's lives." About two years later, however, it suddenly occurred to me that the terrorists must feel hatred toward Americans and those who pay taxes in the U.S. because their own families and friends' lives are taken by American policies. I still thought the terrorists were evil, but then I realized that this meant I, too, was evil for being part of this cycle of hatred, and I felt ashamed. I thought the only way forward was to learn to love my enemies. Suddenly, the words of Jesus Christ from the New Testament, "Love your enemies," which I had read in a book borrowed from a friend around the fifth grade when I was interested in Western culture, resonated with me. Until then, I had disliked the idea that "only Christians can go to heaven" and had an aversion to the religion of Christianity, but I decided to read the Bible seriously and, for the first time in my life, bought one and began to read it.

I began reading the Bible because I wanted to cherish everyone with the unconditional love that extends even to enemies, but when I imagined a terrorist coming to my home to take my family's lives, I felt I simply could not love my enemy. On the morning of April 18, 2003, I came to believe that while I could not achieve unconditional love on my own, God has the power to love even enemies with unconditional love and also has the power to help me grow into someone who can love with unconditional love. I also came to believe that Jesus Christ died on the cross for my deviation from unconditional love.

After coming to this faith, I temporarily felt that teaching and researching economics contradicted unconditional love, and I consulted my pastor, telling him, "I feel like quitting being an economist." The pastor advised me, "Your economic behavior must have changed when you found your faith, so thinking about that should give you a hint on how to live as an economist with faith." Thinking about it, I realized that I was no longer as reluctant to make donations as I had been before. In my previous worldview, I believed that illnesses and accidents were meaningless coincidences, so I wanted to save money rather than donate, to prepare for the possibility of my children facing illness or accidents in the future. But in my new worldview, I was beginning to feel that there was nothing to fear, as an omniscient, omnipotent God, with unconditional love, would only allow illnesses and accidents to happen if they had a purpose, such as personal growth. As a result, making donations became much less of a burden. I interpreted this not as a difference in religion affecting economic behavior, but as a change in worldview affecting economic behavior. I concluded that the influence of worldview on economic behavior, though not studied in traditional economics based on *Homo economicus*, is an important research theme for behavioral economics, which deals with human beings.

Thus, I began to focus my research in behavioral economics on the influence of various human worldviews on economic behavior. In my seminars at Keio University starting in 2010, I had third-year students conduct group research on the theme "The Influence of Worldview on Economic Behavior," while fourth-year students worked on their graduation theses in behavioral economics, which did not necessarily have to be related to worldview. My own research was greatly influenced by the diverse studies of my seminar students, and I began research in normative economics, specifically on "how the results of normative economics regarding how resources should be allocated change depending on the different ethical views (a part of worldview) used by economists." Furthermore, from books like Michael Sandel's "Justice: What's the Right Thing to Do?," which I began reading for the study of ethics in my seminar, I learned that there are three major approaches to normative ethics. The ethical approach of welfarism, which economists have traditionally used, belongs to one of these three major approaches, consequentialism, which focuses solely on outcomes like utility. I learned that the other major approaches are deontology, which emphasizes ethical duties, and virtue ethics, which emphasizes acquiring virtues and capabilities to contribute to society and communal intelligence. From research integrating these approaches within behavioral economics models, I conducted a study proposing an ethical principle called the "learning of unconditional love." This principle involves growing by learning virtues such as altruism and striving toward the ideal duty of cherishing everyone with unconditional love, while avoiding imbalances caused by pushing oneself to the point of significantly decreasing one's own utility.

The learning of unconditional love typically involves stages, starting with acquiring the virtue of altruism within a small community and gradually extending it to larger communities. This led me to study communities and servant leadership, which builds and develops them. This research evolved, and since around 2019, I have been focusing on the study of community mechanisms that complement market mechanisms and the power mechanisms primarily used by the public sector. In Japan and many other countries, populations are aging, and the number of people unable to use market mechanisms on their own due to declining cognitive abilities is increasing. At the same time, government fiscal crises caused by declining birthrates mean that we cannot rely solely on the public sector to solve these problems. Furthermore, as we live in an era of crises caused by earthquakes, tsunamis, infectious diseases, and environmental issues, I believe the need to utilize community mechanisms will only grow in the future.

I believe the key to researching how community mechanisms should be utilized in combination with market and power mechanisms lies in how we can increase trust as a form of social capital. To advance this kind of research, we need panel data that tracks individuals and collects information on trust and various other economic variables. The Panel Data Research Center at the Institute for Economic Studies, affiliated with the Faculty of Economics at Keio University, has been collecting panel data through questionnaires in the Japan Household Panel Survey. In fiscal year 2022, the center established a Social Capital Division and appointed me as its leader, enabling me to advance my research by collecting individual tracking data on trust and other economic variables through online experiments and surveys.

In this way, the opportunity to teach and research behavioral economics at Keio University has greatly influenced and advanced my own research. I am sincerely grateful.