SMU Assistant Professor of Accounting Liu Yanju examines how economic agents make decisions when faced with the choice of behaving ethically or increasing their financial gain. In her research, Assistant Prof Liu quantifies how private and social interests interact, and the conditions under which one interest can take precedence over the other. In order to study how the two different motivations influence the behaviour of economic agents, she first had to determine a way of measuring social norms. Focusing on the ‘sin’ industries of tobacco, alcohol and gaming, Assistant Prof Liu adopted a unique approach to estimating social acceptability: using consumption as a proxy for social acceptance. This approach provided her with a direct empirical measure of social norms, as consumption of ‘sin’ products closely matched their social acceptability. Together with collaborators from the University of Toronto and McMaster University, she then correlated the consumption of ‘sin’ products with the amount of investment from institutional investors, and the level of coverage by financial analysts – both of which are publicly available data. The study was recently published in the journal “Accounting, Organizations and Society”.