New Economics Papers
on Neuroeconomics
Issue of 2011‒09‒05
six papers chosen by

  1. Integrating Personality Psychology into Economics By James J. Heckman
  2. Tastes, Castes, and Culture: The Influence of Society on Preferences By Fehr, Ernst; Hoff, Karla
  3. The Stability of Big-Five Personality Traits By Cobb-Clark, Deborah A.; Schurer, Stefanie
  4. ATTENTION AND SCHOOL SUCCESS: The Long-Term Implications of Attention for School Success among Low-Income Children By Rachel A. Razza; Anne Martin; Jeanne Brooks-Gunn
  5. Economic Conditions at the Time of Birth and Cognitive Abilities Late in Life: Evidence from Eleven European Countries By Doblhammer, Gabriele; van den Berg, Gerard J.; Fritze, Thomas
  6. Who lost the most? Financial Literacy, Cognitive Abilities, and the Financial Crisis By Tabea Bucher-Koenen; Michael Ziegelmeyer

  1. By: James J. Heckman
    Abstract: This paper reviews the problems and potential benefits of integrating personality psychology into economics. Economists have much to learn from and contribute to personality psychology.
    JEL: I2 J24
    Date: 2011–08
  2. By: Fehr, Ernst (University of Zurich); Hoff, Karla (World Bank)
    Abstract: Economists have traditionally treated preferences as exogenously given. Preferences are assumed to be influenced by neither beliefs nor the constraints people face. As a consequence, changes in behaviour are explained exclusively in terms of changes in the set of feasible alternatives. Here we argue that the opposition to explaining behavioural changes in terms of preference changes is ill-founded, that the psychological properties of preferences render them susceptible to direct social influences, and that the impact of "society" on preferences is likely to have important economic and social consequences.
    Keywords: endogenous preferences, culture, caste, frames, anchors, elicitation devices
    JEL: A12 A13 D01 K0
    Date: 2011–08
  3. By: Cobb-Clark, Deborah A. (University of Melbourne); Schurer, Stefanie (Victoria University of Wellington)
    Abstract: We use a large, nationally-representative sample of working-age adults to demonstrate that personality (as measured by the Big Five) is stable over a four-year period. Average personality changes are small and do not vary substantially across age groups. Intra-individual personality change is generally unrelated to experiencing adverse life events and is unlikely to be economically meaningful. Like other non-cognitive traits, personality can be modeled as a stable input into many economic decisions.
    Keywords: non-cognitive skills, Big-Five personality traits, stability
    JEL: J24
    Date: 2011–08
  4. By: Rachel A. Razza (Syracuse University); Anne Martin (Columbia University); Jeanne Brooks-Gunn (Columbia University)
    Abstract: This study examined the longitudinal associations between sustained attention in preschool and children’s school success in later elementary school within a low-income sample (N = 2,403). Specifically, two facets of sustained attention (focused attention and lack of impulsivity) at age 5 were explored as independent predictors of children’s academic and behavioral competence across eight measures at age 9. Overall, the pattern of results indicates specificity between the facets of attention and school success, such that focused attention was primarily predictive of academic outcomes while impulsivity was mainly predictive of behavioral outcomes. Both facets of attention predicted teacher ratings of children’s academic skills and approaches to learning, which suggests that they jointly influence outcomes that span both domains of school success. Patterns of association were similar for children above and below the poverty line. Implications of these findings for interventions targeting school readiness and success among at-risk children are discussed.
    Keywords: sustained attention, academic achievement, behavioral competence, low-income children
    JEL: D19 D69 I21 I32 J13
    Date: 2011–08
  5. By: Doblhammer, Gabriele (University of Rostock); van den Berg, Gerard J. (University of Mannheim); Fritze, Thomas (Rostock Center for the Study of Demographic Change)
    Abstract: With ageing populations and a stronger reliance on individual financial decision-making concerning asset portfolios, retirement schemes, pensions and insurances, it becomes increasingly important to understand the determinants of cognitive ability among the elderly. Macro-economic recession and boom periods provide a unique opportunity to study the effect of changes in the early life economic environment on late life cognition. In European countries, about three to four economic recession and boom periods can be identified between 1900 and 1945. The timing of these periods differs between the countries, which makes a cross-country study design particularly powerful, as it is insensitive to country-specific confounding factors. We use data from the Survey of Health, Aging and Retirement in Europe (SHARE) among elderly individuals. This survey is homogeneous across countries. We use almost 20,000 respondents from 11 countries. We examine several domains of cognitive functioning at ages 60+ and link them to the macro-economic deviations in the year of birth, controlling for current demographic, socioeconomic and health status. We find that being born during a recession or boom period significantly influences cognitive functioning late in life in various domains. The effects are particularly pronounced among the less educated. Boom periods positively influence numeracy and verbal fluency as well as the score on the omnibus cognitive indicator. The results are robust; controlling for current characteristics does not change effect sizes and significance. We conclude that cognitive functioning late in life is influenced by economic conditions in the year of birth, and we discuss possible causal pathways.
    Keywords: dementia, long-run effects, health, developmental origins, economic business cycle, cognition, numeracy, memory, decision-making
    JEL: I12 I18 J14 N14 N34 J26
    Date: 2011–08
  6. By: Tabea Bucher-Koenen; Michael Ziegelmeyer
    Abstract: We study how and to what extent private households are affected by the recent financial crisis and how their financial decisions are inuenced by this shock. Our analysis reveals that individuals with low levels of financial literacy are less likely to have invested in the stock market and thus are less likely to report losses in wealth. Yet, individuals with low financial literacy are more likely to sell their assets which lost in value (realize losses). This reaction to short-term losses has potential longterm consequences if individuals do not participate in markets' recovery and face lower returns in the long run.
    Keywords: Financial literacy, cognitive ability, financial crisis, life-cycle savings, saving behavior, portfolio choice
    JEL: D91 D14 G11
    Date: 2011–02

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