|
on Neuroeconomics |
| By: | Niklas M. Witzig (Johannes-Gutenberg University, Germany) |
| Abstract: | I study altruistic choices through the lens of a cognitively noisy decision-maker. I introduce a theoretical framework that demonstrates how increased cognitive noise can directionally affect altruistic decisions and put its implications to the test: In a laboratory experiment, participants make a series of binary choices between taking and giving monetary payments. In the treatment, to-be-calculated sums replace plain monetary payments, increasing the cognitive difficulty of choosing. The Treatment group exhibits a lower sensitivity towards changes in payments and decides significantly more often in favor of the other person, i.e., is more altruistic. I explore the origins of this effect with Bayesian hierarchical models and a number-comparison task, mirroring the mechanics of the altruism choices absent any altruistic preference. The treatment effect is similar in this task, suggesting that a biased perception of numerical magnitudes drives treatment differences. The probabilistic models support this interpretation. A series of additional results show a negative correlation between cognitive reflection and individual measures of cognitive noise, as well as associations between altruistic choice and number comparison. Overall, these results suggest that altruistic preferences – and potentially social preferences more generally – are affected by the cognitive difficulty of their implementation. |
| Keywords: | Cognitive Noise, Altruism, Bayesian Hierarchical Models, Experiment. |
| JEL: | C91 D91 |
| Date: | 2024–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:jgu:wpaper:2415 |
| By: | Breitkopf, Laura (Max Planck Institute for Research on Collective Goods); Chowdhury, Shyamal (University of Sydney); Priyam, Shambhavi (Max Planck Institute for Research on Collective Goods); Schildberg-Hörisch, Hannah (Max Planck Institute for Research on Collective Goods); Sutter, Matthias (Max Planck Institute for Research on Collective Goods) |
| Abstract: | We study the relationship between parenting style and a broad range of children's skills and outcomes. Based on survey and experimental data from 5, 580 children and their parents, we find that children exposed to positive parenting have higher IQs, are more altruistic, open to new experiences, conscientious, and agreeable, have a higher locus of control, self-control, and self-esteem, perform better in scholarly achievement tests, behave more prosocially in everyday life, and are more satisfied with their life. Positive parenting is negatively associated with children's neuroticism, patience, engagement in risky behaviors, and their emotional and behavioral problems. |
| Keywords: | parenting style, child outcomes, economic preferences, personality traits, IQ |
| JEL: | C91 D01 D10 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17336 |
| By: | Blouin, Arthur (University of Toronto); Mani, Anandi (University of Oxford); Mukand, Sharun W. (University of Warwick); Sgroi, Daniel (University of Warwick & IZA) |
| Abstract: | Can inequality in rewards result in an erosion in broad-based support for meritocratic norms? We hypothesize that unequal rewards between the successful and the rest, drives a cognitive gap in their meritocratic beliefs, and hence their social preferences for redistribution. Two separate experiments (one in the UK and the other in the USA) show that the elite develop and maintain “meritocratic bias†in the redistributive taxes they propose, even when not applied to their own income: lower taxes on the rich and fewer transfers to the poor, including those who failed despite high effort. These social preferences at least partially reflect a self-serving meritocratic illusion that their own high income was deserved. A Wason Card task confirms that individuals maintain their illusion of being meritocratic, by not expending cognitive effort to process information that may undermine their self-image even when incentivized to do otherwise. |
| Keywords: | Inequality; Meritocracy; Redistribution; Populism; Motivated Reasoning; Social Preferences JEL Classification: |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:717 |
| By: | J. Aislinn Bohren (University of Pennsylvania); Josh Hascher (University of Chicago); Alex Imas (University of Chicago); Michael Ungeheuer (Aalto University); Martin Weber (University of Mannheim) |
| Abstract: | We propose a framework where perceptions of uncertainty are driven by the interaction between cognitive constraints and the way that people learn about it—whether information is presented sequentially or simultaneously. People can learn about uncertainty by observing the distribution of outcomes all at once (e.g., seeing a stock return distribution) or sampling outcomes from the relevant distribution sequentially (e.g., experiencing a series of stock returns). Limited attention leads to the overweighting of unlikely but salient events—the dominant force when learning from simultaneous information—whereas imperfect recall leads to the underweighting of such events—the dominant force when learning sequentially. A series of studies show that, when learning from simultaneous information, people are overoptimistic about and are attracted to assets that mostly underperform, but sporadically exhibit large outperformance. However, they overwhelmingly select more consistently outperforming assets when learning the same information sequentially, and this is reflected in beliefs. The entire 40-percentage point preference reversal appears to be driven by limited attention and memory; manipulating these factors completely eliminates the effect of the learning environment on choices and beliefs, and can even reverse it. Our results have implication for the design of policy and the recovery of preferences from choice data. |
| Keywords: | Choice Under Risk, Bounded Rationality, Perceptions of Uncertainty, Information, Beliefs, Attention, Memory, Description-Experience Gap |
| Date: | 2024–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:24-031 |
| By: | Herbst, Chris M. (Arizona State University) |
| Abstract: | Although it is widely acknowledged that high-skilled teachers are integral to service quality and young children's well-being in child care settings, little is known about the qualifications and skills of the child care workforce. This paper combines data from multiple sources to provide a comprehensive assessment of the quality of individuals employed in the child care sector. I find that today's workforce is relatively low- skilled: child care workers have less schooling than those in other occupations, they score substantially lower on tests of cognitive ability, and they are among the lowest-paid individuals in the economy. I also show that the relative quality of the child care workforce is declining, in part because higher-skilled individuals increasingly find the child care sector less attractive than other occupations. Furthermore, I provide evidence that at least three other factors may be associated with the decline in worker quality. First, the recent proliferation of community college programs offering child care-related certificates and degrees may divert students away from attending four-year schools. Second, those majoring in child care-related fields are negatively selected for their cognitive skills, thereby decreasing the quality of the child care labor pool. Third, I show that the increased availability of outside employment options for high-skilled women had a detrimental effect on the quality of the child care workforce. |
| Keywords: | child care, child care quality, early childhood education, teacher quality |
| JEL: | I21 J13 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17351 |
| By: | Nurfatima Jandarova (Tampere University, Finnish Centre of Excellence in Tax Systems Research (FIT)); Aldo Rustichini (University of Minnesota) |
| Abstract: | Political behavior of citizens includes political participation and preferences. We show with UK data that political behavior is affected by individual characteristics that are also determining educational attainment, including cognitive abilities and intelligence. Our analysis reconciles the rational choice assumption with the acquisition of costly political information, which would otherwise give only negligible benefits. We disentangle the causal pathways by identifying effects operating directly and those operating indirectly, in particular through education and income. We address the issue of endogeneity of cognitive skills using polygenic scores, and show that an important component of the causal factors is genetic. |
| Keywords: | political participation, party preferences, human capital, intelligence, individual characteristics, polygenic score |
| JEL: | D72 I25 J31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:fit:wpaper:25 |