nep-neu New Economics Papers
on Neuroeconomics
Issue of 2009‒07‒11
seven papers chosen by
Daniel Houser
George Mason University

  1. Using Genetic Lotteries within Families to Examine the Causal Impact of Poor Health on Academic Achievement By Jason M. Fletcher; Steven F. Lehrer
  2. The Height Premium in Earnings: The Role of Physical Capacity and Cognitive and Non-Cognitive Skills By Lundborg, Petter; Nystedt, Paul; Rooth, Dan-Olof
  3. Birth Weight and the Dynamics of Early Cognitive and Behavioural Development By Del Bono, Emilia; Ermisch, John
  4. Are Social Preferences Skin Deep? Dictators under Cognitive Load By Hauge, Karen Evelyn; Brekke, Kjell Arne; Johansson, Lars-Olof; Johansson-Stenman, Olof; Svedsäter, Henrik
  5. Does training on behavioral finance influence fund managers' perception and behavior? By Nikiforow, Marina
  6. Fat Debtors: Time Discounting, Its Anomalies, and Body Mass Index By Shinsuke Ikeda; Kang Myong-Il; Fumio Ohtake
  7. Defence of Absurd Theories in Economics By Nordberg, Morten; Røgeberg, Ole Jørgen

  1. By: Jason M. Fletcher; Steven F. Lehrer
    Abstract: While there is a well-established, large positive correlation between mental and physical health and education outcomes, establishing a causal link remains a substantial challenge. Building on findings from the biomedical literature, we exploit specific differences in the genetic code between siblings within the same family to estimate the causal impact of several poor health conditions on academic outcomes. We present evidence of large impacts of poor mental health on academic achievement. Further, our estimates suggest that family fixed effects estimators by themselves cannot fully account for the endogeneity of poor health. Finally, our sensitivity analysis suggests that these differences in specific portions of the genetic code have good statistical properties and that our results are robust to reasonable violations of the exclusion restriction assumption.
    JEL: C33 I12 I21
    Date: 2009–07
  2. By: Lundborg, Petter (VU University Amsterdam); Nystedt, Paul (Linköping University); Rooth, Dan-Olof (Kalmar University)
    Abstract: The association between stature and favorable labor market outcomes has been extensively documented. Recent studies have attributed this height premium to cognitive and social skills. We offer an alternative explanation, where the premium mainly arises from the positive association between height and physical capacity. Accounting for the latter reduces the height premium by about 80 percent. By also accounting for cognitive and non-cognitive skills, we are able to explain the entire height premium. Our estimates are based on data from the military enlistment register that has been linked to earnings for the entire population of Swedish males aged 28-38 in 2003.
    Keywords: earnings, height premium, cognitive and non-cognitive skills, physical capacity
    JEL: J10 J70
    Date: 2009–06
  3. By: Del Bono, Emilia (ISER, University of Essex); Ermisch, John (University of Essex)
    Abstract: In this paper we explore the impact of birth weight on children's cognitive and behavioural outcomes using data from the UK Millennium Cohort Study. In order to deal with the endogeneity of birth weight we use an estimator based on the eliminant method. When coupled with ordinary least squares, this estimator allows us to bound the effects of birth weight. The results show that birth weight has significant but very small effects on male cognitive development at age 3 and on female cognitive and behavioural outcomes at age 3. We also find that birth weight affects age 5 outcomes only through previous achievements, and that the overall impact fades out over time. These findings call into question the effectiveness of birth weight as a policy target.
    Keywords: birth weight, production function, child development
    JEL: I12 I21 J13 J24
    Date: 2009–06
  4. By: Hauge, Karen Evelyn (Department of Economics, Oslo University); Brekke, Kjell Arne (Department of Economics, Oslo University); Johansson, Lars-Olof (Department of Psychology, University of Gothenburg); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Svedsäter, Henrik (Organisational Behaviour, London Business School)
    Abstract: We study the impact of cognitive load in dictator games to test two conflicting views of moral behavior. Are social preferences skindeep in the sense that they are the result of humans’ cognitive reasoning while the natural instinct is selfish, or is rather the natural instinct to share fairly while our cognitive capacities are able to adjust moral principles in a selfserving manner? Some previous studies in more complex settings give conflicting answers, and to disentangle different possible mechanisms we use simple games. We study both charitable giving and the behavior of dictators under high and low cognitive load, where high cognitive load is assumed to reduce the impact of cognitive processes on behavior. In the dictator game we use both a give frame, where the dictator is given an amount and may share some or all of it to a partner, and a take frame, where dictators may take from an amount initially allocated to the partner. The results from four different studies indicate that the effect of cognitive load is small if at all existing.<p>
    Keywords: Social Preferences; experiments; dictator game; cognitive load
    JEL: C91
    Date: 2009–07–03
  5. By: Nikiforow, Marina
    Abstract: This paper provides survey evidence on the influence of training on behavioral finance on professional fund managers' perception and investment behavior. In particular, it examines whether "trained" fund managers differ from the "untrained" ones in their perception of markets and themselves as well as in their choice of information sources and investment strategies. Additionally, the influence of integration of behavioral finance approaches into investment processes is also considered. The results reveal that training on behavioral finance basically intensifies the perception of biases in the behavior of others, i.e. the reflection effect and the home bias. Training also reduces the affinity to conformity, leading to less reliance on colleagues and other market participants as information sources. However, pure training is insufficient to significantly affect fund managers' investment behavior, but behavioral finance approaches need to be integrated into investment processes.
    Keywords: behavioral finance, fund managers, biases, training, integration
    JEL: G10 D83
    Date: 2009–06
  6. By: Shinsuke Ikeda; Kang Myong-Il; Fumio Ohtake
    Abstract: In view of the finding that debtors are likely to be more obese than nondebtors, we investigate whether interpersonal differences in body mass are, as in the case of debt behavior, related to those in time discounting and time discounting anomalies. The effects of time discounting on body massindex (BMI) and the probabilities of being obese, severely obese, and underweightare detected by incorporating three properties of intertemporal preferences: (i) impatience, measured by the level of the respondentsf discountrate; (ii) hyperbolic discounting, where discount rates for the discountingof immediate future payoffs are higher than those of distant future payoffs; and (iii) the sign effect, wherein future negative payoffs are discounted ata lower rate than are future positive payoffs. We also find that body mass is non-monotonically correlated with age, income, and working hours. As a policy implication, body mass can potentially be controlled by changing the intertemporal structure of medical care costs.
    Date: 2009–03
  7. By: Nordberg, Morten (The Ragnar Frisch Centre for Economic Research); Røgeberg, Ole Jørgen (The Ragnar Frisch Centre for Economic Research)
    Abstract: Theories that involve plainly false and even bizarre assumptions are argued to have an important role in bundling empirical facts in a way that allows these to be understood, handled and used as modules in the construction of mechanisms by economists with human cognitive limits. Absurd theories are subcomponents used in a valid explanatory strategy as long as the mechanisms only derive the implications of the facts summarised. This provides a defence and explanation of many economic theories, but also imposes hard limits on such theorising.
    Keywords: As-if theory; Economic methodology; welfare economics
    JEL: B41 D00
    Date: 2009–06–22

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