nep-neu New Economics Papers
on Neuroeconomics
Issue of 2017‒02‒26
seven papers chosen by

  1. A cross-country empirical test of cognitive abilities and innovation nexus By Azam, Sardor
  2. Government size, intelligence and life satisfaction By Salahodjaev, Raufhon
  3. Because of you I did not give up - How peers affect perseverance By Gerhards, Leonie; Gravert, Christina
  4. Dual decision processes: Retrieving preferences when some choices are intuitive By Francesco Cerigioni
  5. Sectoral Cognitive Skills, R&D, and Productivity: A Cross-Country Cross-Sector Analysis By Sasso, Simone; Ritzen, Jo
  6. The cognitive and geographical structure of knowledge links and how they influence firms’ innovation performance By Broekel, Tom; Boschma, Ron
  7. Making it right? Social norms, hand writing and cognitive skills By Guber, Raphael

  1. By: Azam, Sardor
    Abstract: In this study we analyze the relationship between national cognitive abilities and innovational output using data from 124 countries of the world. By employing cross-country IQ scores traditionally used by psychological literature to represent national intelligence, and Economic Complexity Index as a novel measure of innovation, our study shows that there is a positive connection between them. We use a variety of tests to check the robustness of the nexus. Overall, our findings indicate that more intelligent nations export more sophisticated and diverse products to the world market and thus are more innovative. Therefore, developing countries should consider investing in human capital and related institutions if they are to boost innovative capabilities and move up the technology ladder in producing and exporting sophisticated and varied lines of products. This should bring them greater economic diversity which could be a right lever in mitigating negative external shocks.
    Keywords: IQ; Intelligence; Economic complexity index; Innovation
    JEL: F10 I25 O3
    Date: 2017–01–20
  2. By: Salahodjaev, Raufhon
    Abstract: Recent studies show that psychological factors such as cognitive ability play an important role in the empirical modeling of life satisfaction and suggest that intelligence is an important proxy for political and intellectual capital. These articles, however, only explore the direct effect of intelligence on subjective wellbeing. In this study, we conjecture that intellectual capital is a mechanism through which the size of bureaucracy impacts life satisfaction. Using data from 147 countries, we find that the interaction term between nation-IQ and government size is positive and significant, suggesting that government size increases life satisfaction most in high-IQ countries and least in countries with lower levels of cognitive abilities.
    Keywords: intelligence, government size, life satisfaction
    JEL: F0
    Date: 2017
  3. By: Gerhards, Leonie; Gravert, Christina
    Abstract: Various empirical paper have shown that peers affect productivity and behavior in the workplace. However, the mechanisms through which peers influence each other are still largely unknown. In this laboratory experiment we study a situation in which individuals might look at their peers' behavior to motivate themselves to endure in a task that requires perseverance. We test the impact of unidirectional peer effects under individual monetary incentives, controlling for ability and tactics. We find that peers significantly increase their observers' perseverance, while knowing about being observed does not significantly affect behavior. In a second experiment we investigate the motives to self-select into the role of an observing or an observant subject and what kind of peers individuals deliberately choose. Our findings from this treatment provide first insights on the perception of peer situations by individuals and new empirical evidence on how peer groups emerge.
    JEL: C91 M50 J24
    Date: 2016
  4. By: Francesco Cerigioni
    Abstract: Evidence from cognitive sciences shows that some choices are conscious and re ect individual prefer- ences while others tend to be intuitive, driven by analogies with past experiences. Under these circum- stances, usual economic modeling might not be valid because not all choices are the consequence of individual tastes. We here propose a behavioral model that can be used in standard economic analysis that formalizes how conscious and intuitive choices arise by presenting a decision maker composed by two systems. One system compares past decision problems with the one the decision maker faces, and it replicates past behavior when the problems are similar enough (Intuitive choices). Otherwise, a second system is activated and preferences are maximized (Conscious choices). We then present a novel method capable of nding conscious choices just from observed behavior and nally, we provide a choice theoretical foundation of the model and discuss its importance as a general framework to study behavioral inertia.
    Keywords: Dual Processes, Fast and Slow Thinking, Similarity, Revealed Preferences, Memory, Intuition
    JEL: D01 D03 D60
    Date: 2016–09
  5. By: Sasso, Simone (Maastricht University); Ritzen, Jo (IZA and Maastricht University)
    Abstract: We focus on human capital measured by education outcomes (skills) and establish the relationship between human capital, R&D investments, and productivity across 12 OECD economies and 17 manufacturing and service industries. Much of the recent literature has relied on school attainment rather than on skills. By making use of data on adult cognitive skills from the Programme for the International Assessment of Adult Competences (PIAAC), we compute a measure of sectoral human capital defined as the average cognitive skills in the workforce of each country-sector combination. Our results show a strong positive relationship between those cognitive skills and the labour productivity in a country-sector combination. The part of the cross-country cross-sector variation in labour productivity that can be explained by human capital is remarkably large when it is measured by the average sectoral skills whereas it appears statistically insignificant in all our specifications when it is measured by the mere sectoral average school attainment. Our results corroborate the positive link between R&D investments and labour productivity, finding elasticities similar to those of previous studies. This evidence calls for a focus on educational outcomes (rather than on mere school attainment) and it suggests that using a measure of average sectoral cognitive skills can represent a major step forward in any kind of future sectoral growth accounting exercise.
    Keywords: sectoral cognitive skills, productivity, R&D, human capital, knowledge stock
    JEL: I21 J24 O47
    Date: 2016–12
  6. By: Broekel, Tom; Boschma, Ron
    Abstract: Firms’ embeddedness in knowledge networks has received much attention in literature. However, little is known about the structure of firms’ knowledge exchange with respect to different types of proximities. Based on survey data of 295 firms in 8 European regions, we show that firms’ knowledge exchange systematically differs in their geographical and cognitive dimensions. We find that firms’ innovation performance is enhanced if the firm primarily links to technologically related as well as technologically similar organizations. Connecting with organizations at different geographical levels yields positive effects as well.
    Keywords: geographical proximity knowledge networks technological relatedness innovation performance
    JEL: D85 O18 O33
    Date: 2017–02
  7. By: Guber, Raphael
    Abstract: Forcing a left-handed child to use the right hand for writing was long common practice in the Western world. Although it is rare now in these societies, it is still highly prevalent in developing countries and across various cultures. Forced right-hand writing is a rare early childhood intervention that was performed on a large scale and throughout history. In this paper we investigate how this intervention affected educational outcomes and cognitive skills in German adults in the mid and long run. To identify causal effects we use the decline of the right-hand writing norm across cohorts in a difference-in-differences first stage, where right-handers serve as counterfactual group. While OLS estimates indicate that treated individuals obtained more years of education and better math grades (compared to all others), our 2SLS coefficients suggest zero or negative effects for educational outcomes, and strong negative effects on cognitive skills. These findings are in line with brain scans that show reduced gray matter in the putamen of switched German adults, which is responsible for motor skills and cognitive functioning.
    JEL: J24 I10 I21
    Date: 2016

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.