nep-neu New Economics Papers
on Neuroeconomics
Issue of 2015‒08‒01
two papers chosen by
Daniel Houser
George Mason University

  1. The Role of Personality, Cognition and Shocks in Determining Age of Entry into Labor Market, Sector of Employment, and within Sector Earnings By Sahn, David E.; Villa, Kira M.
  2. Getting a Leg Up or Pulling it Down? Interpersonal Comparisons and Destructive Actions: Experimental Evidence from Bolivia By Zeballos, Eliana

  1. By: Sahn, David E.; Villa, Kira M.
    Abstract: Growing evidence in the economics literature links “noncognitive” skills to economic, behavioral and demographic outcomes in the developed world. However, there is little such evidence linking these traits to economic outcomes in developing country contexts. This paper estimates the joint effect of five specific personality traits and cognition on the age of entry into the labor market, labor market sectoral selection, and within sector earnings for a sample of young adults in Madagascar. The personality traits we examine are known as the Big Five Personality Traits: Openness to Experience, Conscientiousness, Extraversion, Agreeableness, and Neuroticism. Additionally, we look at how these traits interact with household-level shocks in determining their labor market entry decisions. We find that personality does indeed have an effect on these outcomes of interest and affects how these individuals respond to shocks in their labor decisions.
    Keywords: Cognitive Noncognitive Personality Labor Education Development, International Development, Labor and Human Capital, O12, O15, O17,
    Date: 2015–05–27
    URL: http://d.repec.org/n?u=RePEc:ags:aaea15:205673&r=neu
  2. By: Zeballos, Eliana
    Abstract: Sometimes people, when comparing themselves with others, take a host of actions that are destructive to those around them, even when these actions imply self-inflicted costs. "Pulling down" other more successful individuals may have both direct and indirect detrimental effects on productivity and efficiency. On one hand, welfare is reduced directly as output is destroyed, and indirectly if their threat induces ex-ante behavioral responses in the form of lower levels of effort and investment. Consequently, linking reactions to upward social comparisons and their effect on effort levels may help explain the considerable variability in how people have been shown to react to such comparisons. In this paper, I develop a two-stage, two-agent model of strategic behavior that integrates the role of inter-personal comparisons with conventional neoclassical economic preference theory to analyze how interpersonal comparisons lead to destructive behavior and affect levels of effort. The experiment, designed to test the predictions of the model and tease out the mechanisms that drive destructive behavior, builds on the two-stage "money burning" game. The experimental games were carried out in Bolivia among 285 dairy farmers. Results show that people that were above the within-group mean, in average exert less effort when comparing themselves with others (the "guilt" case); while people below the within-group mean exert more effort (the "keep-up-with-the-Joneses" case). People who fear the envy of others decrease their effort exerted, specially if they are highly ranked. Results from the money burning game show that people below the mean took in average more destructive behavior than people above the mean. Of all the participants, 55% took at least one destructive action against somebody in their group reducing their output by 34%. People seem to be averse to disadvantageous inequalities, but not averse to advantageous inequalities. Moreover, people destroy less the bigger the advantageous difference is but destroy more in the oposite case.
    Keywords: Interpersonal comparisons, Destructive behavior, Envy, Equity, Equality, Institutional and Behavioral Economics, D01, D03, D63,
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:ags:aaea15:205660&r=neu

This nep-neu issue is ©2015 by Daniel Houser. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director@nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.