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on Neuroeconomics |
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Issue of 2022‒02‒07
nine papers chosen by |
| By: | Deborah A. Cobb-Clark (The University of Sydney, School of Economics); Sarah C. Dahmann (Melbourne Institute: Applied Economic & Social Research, the University of Melbourne); Daniel A. Kamhöfer (Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics); Hannah Schildberg-Hörisch (Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics) |
| Abstract: | We propose a broadly applicable empirical approach to classify individuals as time consistent versus naive or sophisticated regarding their self-control limitations. Operationalizing our approach based on nationally representative data reveals that self-control problems are pervasive and that most people are at least partly aware of their limited self-control. Compared to naïfs, sophisticates have higher IQs, better educated parents, and are more likely to take up commitment devices. Accounting for both the level and awareness of self-control limitations has predictive power beyond one-dimensional notions of self-control that neglect awareness. Importantly, sophistication fully compensates for self-control problems when choices involve immediate costs and later benefits. Raising people's awareness of their own self-control limitations may thus assist them in overcoming any adverse consequences. |
| Keywords: | self-control, sophistication, naïveté, commitment devices, present bias |
| JEL: | D91 D01 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2021n16&r= |
| By: | Eric Bonsang; Joan Costa-Font; Sonja DeNew |
| Abstract: | This paper analyses the relationship between locus of control (LOC) and the demand for supplementary health insurance. Drawing on longitudinal data from Germany, we find robust evidence that individuals having an internal LOC are more likely to take up supplementary private health insurance (SUPP). The increase in the probability to have a SUPP due to one standard deviation increase in the measure of internal LOC is equivalent to an increase in household income by 14 percent. Second, we find that the positive association between self-reported health and SUPP becomes small and insignificant when we control for LOC, suggesting that LOC might be an unobserved individual trait that can explain advantageous selection into SUPP. Third, we find comparable results using data from Australia, which enhances the external validity of our results. |
| Keywords: | Private health insurance, health care use, risk aversion, locus of control, positive selection, supplementary insurance, Germany, Australia |
| JEL: | I12 I13 I18 D15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1146&r= |
| By: | John Ameriks; Andrew Caplin; Minjoon Lee; Matthew D. Shapiro; Christopher Tonetti |
| Abstract: | Cognitive decline may lead older Americans to make poor financial decisions. Preventing poor decisions may require timely transfer of financial control to a reliable agent. Cognitive decline, however, can develop unnoticed, creating the possibility of suboptimal timing of the transfer of control. This paper presents survey-based evidence that wealthholders regard suboptimal timing of the transfer of control, in particular delay due to unnoticed cognitive decline, as a substantial risk to financial well-being. This paper provides a theoretical framework to model such a lack of awareness and the resulting welfare loss. |
| JEL: | D14 E21 G51 G53 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29634&r= |
| By: | Bandiera, Oriana (London School of Economics); Parekh, Nidhi (J-PAL Africa); Petrongolo, Barbara (University of Oxford); Rao, Michelle (London School of Economics) |
| Abstract: | Gender differences in self-confidence could explain women's under representation in high-income occupations and glass-ceiling effects. We draw lessons from the economic literature via a survey of experts and a Bayesian hierarchical model that aggregates experimental findings over the last twenty years. The experts' survey indicates beliefs that men are overconfident and women under-confident. Yet, the literature reveals that both men and women are typically overconfident. Moreover, the model cannot reject the hypothesis that gender differences in self-confidence are equal to zero. In addition, the estimated pooling factor is low, implying that each study contains little information over a common phenomenon. The discordance can be reconciled if the experts overestimate the pooling factor or have priors that are biased and precise. |
| Keywords: | gender gaps, over-confidence, Bayesian meta-analysis |
| JEL: | C91 J16 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14950&r= |
| By: | Eva Asselmann; Jule Specht |
| Abstract: | Objective: At work, people are confronted with clear behavioral expectations. In line with the Social Investment Principle, the beginning and ending of working life might thus promote changes in personality traits that are relevant at work (e.g., Conscientiousness). Method: Based on the data from the Socio- Economic Panel Study (SOEP), we examined nuanced differences of the Big Five personality traits in the years around the beginning and ending of working life. Whether participants had started working or retired in the past year was assessed yearly. The Big Five personality traits were assessed in four waves between 2005 and 2017. Results: In people who started working, multilevel analyses revealed that Conscientiousness was higher in the first year of working life versus all other years. Extraversion was higher in and after the first year of working life versus before, and Agreeableness increased gradually in the three years after people had started working. In people who retired, Conscientiousness was lower in and after the first year of retirement versus before. No other traits differed around the start of retirement. Conclusions: Our findings suggest that the start of working life might promote personality maturation and that retirement might promote personality “relaxation.” |
| Keywords: | age differences, career, development, employment, first job, gender differences, life event, life transition, longitudinal, retirement |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1138&r= |
| By: | Damianus Abun (DWCL - Divine Word College of Laoag); Theogenia Magallanes; Frelyn B. Ranay (DWCL - Divine Word College of Laoag); Nimfa Catbagan (DWCL - Divine Word College of Laoag); Rodelyn J. Calairo (DWCL - Divine Word College of Laoag) |
| Abstract: | The study aimed to determine the difference in entrepreneurial values, cognitive attitude toward business, the business intention between ABM grade XII and the fourth-year college students of business management course. It also seeks to find out the effect of entrepreneurial values, cognitive attitude toward the business behavioral intention. The study found that entrepreneurial values, cognitive attitude toward business, and business intention of students are high and it further found that there is no significant difference between entrepreneurial values, cognitive attitude toward business, the business intention of ABM grade XII students, and the fourth-year college students of business management course. Thus, the hypothesis is rejected. It also found that there is a significant correlation between entrepreneurial values, cognitive attitude toward the business, and business behavioral intention. Therefore, the hypothesis is accepted. |
| Keywords: | attitude,entrepreneurial values,business intention,values education |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03466024&r= |
| By: | Iacopo Morchio |
| Abstract: | What are the returns in terms of children's skills development to child allowance policies? Answering this question requires a theory of the tradeoffs faced by households, as well as a realistic technology of skills formation. I build a model of parental choices which embeds the technology of cognitive and noncognitive skills formation estimated by Cunha et al. (2010), featuring risky investment in children, time use trade-offs, idiosyncratic income risk and borrowing constraints. Accounting for noncognitive skills implies higher effectiveness of parental investments, and therefore higher policy returns than previously estimated in the literature. |
| Date: | 2022–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:22/755&r= |
| By: | Ingo S. Seifert; Julia M. Rohrer; Boris Egloff; Stefan C. Schmukle |
| Abstract: | Several studies have suggested that the rank-order stability of personality increases until midlife and declines later in old age. However, this inverted U-shaped pattern has not consistently emerged in previous research; in particular, a recent investigation implementing several methodological advances failed to support it. To resolve the matter, we analyzed data from two representative panel studies and investigated how certain methodological decisions affect conclusions regarding the age trajectories of stability. The data came from Australia (N = 15,465; Study 1) and Germany (N = 21,777; Study 2), and each study included four waves of personality assessment. We investigated the life span development of the rank-order stability of the Big Five for 4-, 8-, and 12-year intervals. Whereas Study 1 provided strong evidence for an inverted U-shape with rank-order stability declining past age 50, Study 2 provided more mixed results that nonetheless generally supported the inverted U-shape. This developmental trend held for single personality traits as well as for the overall pattern across traits; and it held for all three retest intervals—both descriptively and in formal tests. Additionally, we found evidence that health-related changes accounted for the decline in rank-order stability in older age. This suggests that if analyses are implicitly conditioned on health (e.g., by excluding participants with missing data on later waves), the decline in stability in old age will be underestimated or even missed. Our results provide further evidence for the inverted U-shaped age pattern in personality stability development but also extend knowledge about the underlying processes. |
| Keywords: | personality development, rank-order stability, Big Five, panel studies, local structural equation modeling |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1156&r= |
| By: | Edda Claus (Wilfrid Laurier University); Viet Hoang Nguyen (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne) |
| Abstract: | Using a quarterly consumer expectations survey, we propose two novel measures of consumer optimism, ex ante optimism and ex post optimism. We demonstrate empirically that excessive optimism about future family finances impacts the real economy. The excessive optimism (ex ante optimism) compels consumers to save less and borrow more, putting upward pressure on consumption growth. When family finances improve persistently less than expected (ex post optimism), consumers cut back on credit and save more which puts downward pressure on consumption growth. This saving and borrowing channel of the optimism bias is robust to consumer age. |
| Keywords: | Cognitive Bias, Saving, Borrowing, Consumption, Expectations Survey Data. |
| JEL: | E71 D12 D14 D84 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2020n11&r= |