nep-neu New Economics Papers
on Neuroeconomics
Issue of 2017‒05‒07
three papers chosen by

  1. Does Early Child Care Attendance Influence Children's Cognitive and Non-Cognitive Skill Development? By Kühnle, Daniel; Oberfichtner, Michael
  2. Relative Verbal Intelligence and Happiness By Nikolaev, Boris; McGee, Jennifer
  3. CONFIDENCE AND OVERCONFIDENCE IN BANKING By Damiano Bruno Silipo; Giovanni Verga; Sviatlana Hlebik

  1. By: Kühnle, Daniel (University of Erlangen-Nuremberg); Oberfichtner, Michael (University of Erlangen-Nuremberg)
    Abstract: While recent studies mostly find that attending child care earlier improves the skills of children from low socio-economic and non-native backgrounds in the short-run, it remains unclear whether such positive effects persist. We identify the short- and medium-run effects of early child care attendance in Germany using a fuzzy discontinuity in child care starting age between December and January. This discontinuity arises as children typically start formal child care in the summer of the calendar year in which they turn three. Combining rich survey and administrative data, we follow one cohort from age five to 15 and examine standardised cognitive test scores, non-cognitive skill measures, and school track choice. We find no evidence that starting child care earlier affects children's outcomes in the short- or medium-run. Our precise estimates rule out large effects for children whose parents have a strong preference for sending them to early child care.
    Keywords: child care, child development, skill formation, cognitive skills, non-cognitive skills, fuzzy regression discontinuity
    JEL: J13 I21 I38
    Date: 2017–03
  2. By: Nikolaev, Boris; McGee, Jennifer
    Abstract: Even though higher intelligence (IQ) is often associated with many positive outcomes in life, it has become a stylized fact in the happiness literature that smarter people are not happier than their less intelligent counterparts. In this paper, we examine how relative verbal intelligence correlates with happiness and present two main findings. First, our estimations from the General Social Survey for a large representative sample of Americans suggest a small, but positive and significant correlation between verbal intelligence and happiness. Second, we find that verbal intelligence has a strong positional effect on happiness, i.e., people who have greater verbal proficiency relative to their peers in their reference group are more likely to report higher levels of happiness. The positional effect of happiness holds even when we control for a large set of socio-economic characteristics as well as relative income.
    Keywords: Verbal Intelligence, Social Comparison, Happiness
    JEL: I26 I3 I31
    Date: 2016
  3. By: Damiano Bruno Silipo; Giovanni Verga; Sviatlana Hlebik (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: The paper investigates the causes of confidence and overconfidence and their effects on banking behavior and performance for a large sample of American banks in the period 2000-2013. We construct a new indicator of confidence based on banks’ loss provisions and show that before 2007 risk-taking, lending and leverage increased relatively more for banks with an intermediate degree of confidence (mid-confidents) than for the overconfident. The former also suffered the greatest losses in the financial crash of 2007-2008. Hence, unlike the previous literature on overconfidence, we find that the financial crisis was determined mainly by the increased confidence of the mid-confident bank CEOs and not the behavioral biases of overconfident CEOs. The latter, in fact, have more persistent beliefs and react less strongly to news during cyclical upswings. Finally, we show that overconfident behavior is unlikely to maximize a bank’s value.
    Keywords: Confidence and Overconfidence Index, Banking behavior, Confidence and Bank Value
    JEL: G01 G02 G21
    Date: 2017–04

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