New Economics Papers
on Neuroeconomics
Issue of 2013‒06‒04
four papers chosen by

  1. Explaining Cross-Racial Differences in the Educational Gender Gap By Esteban Aucejo
  2. Correlation Neglect in Belief Formation By Benjamin Enke; Florian Zimmermann
  3. Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model By James J. Heckman; Lakshmi K. Raut
  4. Will Sooner Be Better ? The Impact of Early Preschool Enrollment on Cognitive and Noncognitive Achievement of Children By Olivier Filatriau; Denis Fougère; Maxime To

  1. By: Esteban Aucejo
    Abstract: The sizable gender gap in college enrolment, especially among African Americans, constitutes a puzzling empirical regularity that may have serious consequences on marriage markets, male labor force participation and the diversity of college campuses. For instance, only 35.7 percent of all African American undergraduate students were men in 2004. Reduced form results show that, while family background covariates cannot account for the observed gap, proxy measures for non-cognitive skills are crucial to explain it. Moreover, a sequential model of educational attainment indicates that males have actually higher preferences for education than females after controlling for latent factors (i.e. cognitive and non-cognitive skills). The model also shows that cognitive skills strongly affect the decision to move from one school level to the next, especially after finishing high school, but cannot account for disparities between genders. On the contrary, the substantial differences in the distribution of non-cognitive skills between males and females make these abilities critical to explain the gender gap in educational attainment across and within races.
    Keywords: Gender Gap, College Enrollment, Non-cognitive Skills, Cognitive Skills, Race
    JEL: I2 J15 J16
    Date: 2013–05
  2. By: Benjamin Enke; Florian Zimmermann
    Abstract: Many information structures generate correlated rather than mutually independent signals, the news media being a prime example. This paper shows experimentally that in such context many people neglect these correlations in the updating process and treat correlated information as independent. In consequence, people’s beliefs are excessively sensitive to well-conncected information sources, implying a pattern of “overshooting” beliefs. Additionally, in an experimental asset market, correlation neglect not only drives overoptimism and overpessimism at the individual level, but also affects aggregate outcomes in a systematic manner. In particular, the excessive confidence swings caused by correlated signals give rise to predictable price bubbles and cashes. These findings are reminiscent of popular narratives according to which aggregate booms and busts might be driven by the spread of “stories”. Our results also lend direct support to recent models of boundedly rational social learning.
    Keywords: Beliefs, Correlation Neglect, Experiments, Markets, Overshooting
    JEL: C91 D03 D83 D84 D40
    Date: 2013–04
  3. By: James J. Heckman; Lakshmi K. Raut
    Abstract: This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution and intergenerational earnings and schooling mobility. The paper finds that a tax financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings and higher intergenerational earnings and schooling mobility.
    JEL: I21 J24 J62 O15
    Date: 2013–05
  4. By: Olivier Filatriau (CREST); Denis Fougère (CREST and CNRS); Maxime To (CREST and Sciences Po)
    Abstract: In this paper we measure the effect of entering preelementary school at age 2 rather than 3 in France. Our identification strategy relies on ratios between the number of young children and the capacity of preelementary schools observed at the very local level. This information allows us to solve the endogeneity issue due to the potential correlation between unobserved determinants of early enrollment decision and children achievement. We measure this effect on schooling achievement in primary and lower secondary schools. We show that early enrollment in preelementary school improves cognitive and noncognitive skills at age six, and both literacy and numeracy from the third to the ninth grades.
    Keywords: Schooling decision, Preschool, Human capital, Cognitive and noncognitive skills
    JEL: I21 J13
    Date: 2013–05

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