New Economics Papers
on Neuroeconomics
Issue of 2012‒11‒17
four papers chosen by

  1. Cognitive Resource Depletion, Choice Consistency, and Risk Preferences By Marco Castillo; David L. Dickinson; Ragan Petrie
  2. Estimating the Influence of Life Satisfaction and Positive Affect on Later Income Using Sibling Fixed-Effects By Jan-Emmanuel De Neve; Andrew J. Oswald
  3. Validating an Ultra-Short Survey Measure of Patience By Thomas Vischer; Thomas Dohmen; Armin Falk; David Huffman; Jürgen Schupp; Uwe Sunde; Gert G. Wagner
  4. Some Key Differences between a Happy Life and a Meaningful Life By Baumeister, Roy F.; Vohs, Kathleen D.; Aaker, Jennifer L.; Garbinsky, Emily N.

  1. By: Marco Castillo; David L. Dickinson; Ragan Petrie
    Abstract: We investigate the consistency and stability of individual risk preferences by slightly manipulating the cognitive resources of subjects through sleepiness. Participants are recruited and randomly assigned to an experiment session at a preferred time of day relative to their diurnal preference (circadian matched) or at a non-preferred time of day (circadian mismatched). For the decision task, subjects and are asked to choose how much to allocate between two state-dependent assets (using the Choi et al., 2007, design). We have two main findings. First, the consistency of behavior for circadian matched and mismatched subjects is statistically the same. This is true whether it is (nonparametrically) defined as consistency with GARP, payoff dominance, expected utility, disappointment aversion or cumulative prospect theory. Second, while our cognitive resource manipulation yields no difference in consistency of behavior, it results in an increased tendency to take risk. Our experiment confirms theoretical predictions that preferences are consistent yet state-dependent. Key Words:
    Date: 2012
  2. By: Jan-Emmanuel De Neve; Andrew J. Oswald
    Abstract: The question of whether there is a connection between income and psychological well-being is a long-studied issue across the social, psychological, and behavioral sciences. Much research has found that richer people tend to be happier. However, relatively little attention has been paid to whether happier individuals perform better financially in the first place. This possibility of reverse causality is arguably understudied. Using data from a large US representative panel we show that adolescents and young adults who report higher life satisfaction or positive affect grow up to earn significantly higher levels of income later in life. We focus on earnings approximately one decade after the person's well-being is measured; we exploit the availability of sibling clusters to introduce family fixed-effects; we account for the human capacity to imagine later socio-economic outcomes and to anticipate the resulting feelings in current wellbeing. The study's results are robust to the inclusion of controls such as education, IQ, physical health, height, self-esteem, and later happiness. We consider how psychological well-being may influence income. Sobel-Goodman mediation tests reveal direct and indirect effects that carry the influence from happiness to income. Significant mediating pathways include a higher probability of obtaining a college degree, getting hired and promoted, having higher degrees of optimism and extraversion, and less neuroticism.
    Keywords: Income, life satisfaction, positive affect
    JEL: I10 J24
    Date: 2012–11
  3. By: Thomas Vischer; Thomas Dohmen; Armin Falk; David Huffman; Jürgen Schupp; Uwe Sunde; Gert G. Wagner
    Abstract: This study presents results of the validation of an ultra-short survey measure of patience included in the German Socio-Economic Panel (SOEP). Survey responses predict intertemporal choice behavior in incentive-compatible decisions in a representative sample of the German adult population.
    Keywords: Time preferences, discounting, validation of survey measures
    JEL: D01 D03 D91 C91
    Date: 2012
  4. By: Baumeister, Roy F. (FL State University); Vohs, Kathleen D. (University of MN); Aaker, Jennifer L. (Stanford University); Garbinsky, Emily N. (Stanford University)
    Abstract: Being happy and finding life meaningful overlap, but there are important differences. A large survey revealed multiple differing predictors of happiness (controlling for meaning) and meaningfulness (controlling for happiness). Satisfying one's needs and wants increased happiness but was largely irrelevant to meaningfulness. Happiness was largely present-oriented, whereas meaningfulness involves integrating past, present, and future. For example, thinking about future and past was associated with high meaningfulness but low happiness. Happiness was linked to being a taker rather than a giver, whereas meaningfulness went with being a giver rather than a taker. Higher levels of worry, stress, and anxiety were linked to higher meaningfulness but lower happiness. Concerns with personal identity and expressing the self-contributed to meaning but not happiness. We offer brief composite sketches of the unhappy but meaningful life and of the happy but meaningless life.
    Date: 2012–10

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.