nep-neu New Economics Papers
on Neuroeconomics
Issue of 2016‒12‒04
five papers chosen by
Daniel Houser
George Mason University

  1. On the interpretation of non-cognitive skills – what is being measured and why it matters By John Eric Humphries; Fabian Kosse
  2. Is fairness intuitive? An experiment accounting for the role of subjective utility differences under time pressure By Merkel, Anna; Lohse, Johannes
  3. Born to lead? The effect of birth order on non-cognitive abilities By Black, Sandra E.; Grönqvist, Erik; Öckert, Björn
  4. Cognitive Aging and Ability to Work By Anek Belbase; Geoffrey T. Sanzenbacher
  5. The Impact of Executive Functions and Emotional Intelligence on Iowa Gambling Task Performance: Focus on Right Frontal Lobe Damage By Oksana O. Zinchenko; Elena V. Enikolopova

  1. By: John Eric Humphries (University of Chicago, Department of Economics); Fabian Kosse (University of Bonn)
    Abstract: Across academic sub-fields such as labor, education, and behavioral economics, the measurement and interpretation of non-cognitive skills varies widely. As a result, it is difficult to compare results on the importance of non-cognitive skills across literatures. Drawing from these literatures, this paper systematically relates various prototypical non-cognitive measures within one data set. Specifically, we estimate and compare several different strategies for measuring non-cognitive skills. For each, we compare their relative effectiveness at predicting educational success and decompose what is being measured into underlying personality traits and economic preferences. We demonstrate that the construction of the non-cognitive factor greatly influences what is actually measured and what conclusions are reached about the role of non-cognitive skills in life outcomes such as educational attainment. Furthermore, we demonstrate that, while sometimes difficult to interpret, factors extracted from self-reported behaviors can have predictive power similar to well established taxonomies, such as the Big Five.
    Keywords: non-cognitive skills, personality, preferences, educational success
    JEL: J24 I20 D03 D90
    Date: 2016–11
  2. By: Merkel, Anna; Lohse, Johannes
    Abstract: Economists are increasingly interested in the cognitive basis of pro-social behavior. Using response time data, several authors have claimed that "fairness is intuitive". In light of conflicting empirical evidence, we provide theoretical arguments showing under which circumstances an increase in "fair" behavior due to time pressure provides unambiguous evidence in favor of the "fairness is intuitive" hypothesis. Drawing on recent applications of the Drift Diffusion Model (Krajbich et al., 2015a), we demonstrate how the subjective difficulty of making a choice affects choices under time pressure and time delay, thereby making an unambiguous interpretation of time pressure effects contingent on the choice situation. To explore our theoretical considerations and to retest the "fairness is intuitive" hypothesis, we analyze choices in two-person prisoner’s dilemma and binary dictator games. As in previous experiments, we exogenously manipulate response times by placing subjects under time pressure or forcing them to delay their decisions. In addition, we manipulate the subjective difficulty of choosing the fair relative to the selfish option across all choice situations. Our main finding is that time pressure does not increase the fraction of fair choices relative to time delay irrespective of the subjective difficulty of choosing the fair option. Hence, our results cast doubt on the hypothesis that "fairness is intuitive".
    Keywords: distributional preferences; cooperation; response times; time pressure; cognitive processes; drift diffusion models
    Date: 2016–11–30
  3. By: Black, Sandra E. (Department of economics, University of Texas; IZA; NEBR); Grönqvist, Erik (IFAU - Institute for Evaluation of Labour Market and Education Policy); Öckert, Björn (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: We study the effect of birth order on personality traits among men using population data on enlistment records and occupations for Sweden. We find that earlier born men are more persistent, socially outgoing, willing to assume responsibility, and able to take initiative than later-borns. In addition, we find that birth order affects occupational sorting; first-born children are more likely to be managers, while later-born children are more likely to be self-employed. We also find that earlier born children are more likely to be in occupations that require leadership ability, social ability and the Big Five personality traits. Finally, we find a significant role of sex composition within the family. Later-born boys suffer an additional penalty the larger the share of boys among the older siblings. When we investigate possible mechanisms, we find that the negative effects of birth order are driven by post-natal environmental factors. We also find evidence of lower parental human capital investments in later-born children.
    Keywords: birth order; non-cognitive abilities; managerial skills
    JEL: I00 J10
    Date: 2016–11–01
  4. By: Anek Belbase; Geoffrey T. Sanzenbacher
    Abstract: Working longer is an effective way to boost individuals’ retirement security. Thus, understanding who can work longer and who may struggle is a key issue for researchers and policymakers. Some studies find that age-related declines in physical abilities can limit those in physically demanding jobs from working into their late 60s. But the effects of changes in cognitive abilities on work have received less attention. At first glance, it appears that a decline in “fluid” intelligence – the capacity to process new information – and an apparent relationship between fluid intelligence and job achievement could pose a barrier to working longer. However, “crystallized” intelligence – accumulated knowledge – increases with age, and cognitive reserves can offer spare capacity against declining fluid intelligence. As a result, studies comparing the productivity of young and old workers find that age is a crude and unreliable predictor of performance. This brief – the second in a series of three – reviews the research literature to assess how cognitive aging affects the ability to work during ages 50-70. The first brief provided a primer on cognitive aging and the third brief will examine how it affects retirees’ ability to manage their money from ages 70-90. The discussion proceeds as follows. The first section documents that age is not generally related to productivity across a variety of occupations. The second section explains why declining fluid intelligence tends not to impede work ability. The third section looks at the minority of workers who may struggle to remain productive and why. The final section concludes that experience helps many workers in skilled jobs stay productive and workers in less skilled jobs might have more fluid intelligence than their job requires. However, two groups are vulnerable to age-related decline: those in jobs where accumulated knowledge cannot offset demand for fluid intelligence and those who experience cognitive impairment.
    Date: 2016–11
  5. By: Oksana O. Zinchenko (National Research University Higher School of Economics); Elena V. Enikolopova (National Research University Higher School of Economics)
    Abstract: Decision-making under uncertainty in the Iowa Gambling Task (IGT) has been intensively studied over the last twenty years regarding both “hot” and “cold” components. The ventromedial prefrontal cortex is a key region involved in processing somatic marker information, though recent findings suggest that dorsolateral regions are also important. The dorsolateral prefrontal cortex is also known as a substrate of executive functions—the cold component of decision-making. However, there is contradictory evidence about the role of executive functions, as well as the hot component of decision-making—emotional intelligence. This study seeks to address this inconsistency. Previous findings suggest that patients with right frontal lobe lesions should find decision-making more problematic in IGT. This article investigates the importance of emotional intelligence as the hot and executive functions as the cold components of decision-making in IGT. We obtained data from patients with right frontal lobe tumours and healthy controls who undertook IGT, Wisconsin Card Sorting Test (WCST) and D-KEFS Colour-Word Interference Test. The current findings imply that performance in IGT is highly correlated with several parameters of set-shifting in the WCST: correct answers, conceptual level responses and non-perseverative errors. However, no correlation is found with cognitive inhibition parameters in the Colour-Word Interference Test, while an interaction between the emotional intelligence parameters and the performance on IGT is low
    Keywords: Iowa Gambling Task; right frontal lobe tumour; tumour patients; executive functions; lateral prefrontal cortex; emotional intelligence.
    JEL: Z
    Date: 2016

This nep-neu issue is ©2016 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 For comments please write to the director of NEP, Marco Novarese at <>. 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.