nep-neu New Economics Papers
on Neuroeconomics
Issue of 2018‒02‒26
three papers chosen by

  1. Impatience as Selfishness By Jawwad Noor; Norio Takeoka
  2. The influence of non-cognitive skills on wages within and between firms : evidence from Bangladesh's formal sector By Nomura,Shinsaku; Adhikari,Samik
  3. Austerity, Life Satisfaction and Expectations By Sarah Brown; Alexandros Kontonikas; Alberto Montagnoli; Mirko Moro; Luisanna Onnis

  1. By: Jawwad Noor (Department of Economics, Boston University); Norio Takeoka (
    Abstract: Time preference is modelled as a current self that overcomes selfishness by incurring a cognitive cost of empathizing with her future selves. Such a model unifies disparate well-known experimental findings. Behavioral foundations are provided by exploiting the idea that higher stakes provide an incentive for the exertion of higher effort, so that changes in the agent's impatience with respect to the scale of outcomes pin down the underlying process. The behavioral content of limited cognitive resources is shown to lie in violations of Separability.
  2. By: Nomura,Shinsaku; Adhikari,Samik
    Abstract: Many employers and employees believe that non-cognitive skills are an important contributor to labor market success. This study has assessed the empirical evidence for such a claim in the case of Bangladesh by evaluating unique employer-employee matched labor market data. The analysis is based on data collected from 6,981 workers in 500 formal sector firms in Bangladesh's five largest formal economic sectors. Using ordinary least squares and firm fixed-effect models, the study assesses correlations between wages and the so-called"big five"personality traits, and augments the analysis with the latent personality scores captured by the Rasch model. Comparing the ordinary least squares and fixed-effect models reveals statistically significant correlations between personality traits and wages, within and across firms. The results appear to indicate that non-cognitive skills are correlated with a worker's likelihood of achieving success in the labor market. Although many of the findings are consistent with the literature, the analysis reveals specific patterns that appear to be unique to Bangladesh, including a positive correlation between ?emotional stability? and wages and a negative correlation between"grit"and wages, especially among manufacturing workers. Differences across firms could indicate that firms that offer higher wages may tend to attract workers with distinct types of non-cognitive skills, whereas differences within firms may indicate that variations in non-cognitive skills are associated with disparities in firm-level wage structures. Correlations between wages and personality traits are more prominent among large firms than among small or medium-sized firms.
    Keywords: Rural Labor Markets,Educational Populations,Education for Development (superceded),Education For All
    Date: 2017–05–04
  3. By: Sarah Brown (Department of Economics, University of Sheffield); Alexandros Kontonikas (Essex Business School, University of Essex); Alberto Montagnoli (Department of Economics, University of Sheffield); Mirko Moro (Stirling Management School, University of Stirling); Luisanna Onnis (Huddersfield Business School, University of Huddersfield)
    Abstract: This paper examines the linkages between fiscal austerity and life satisfaction across sixteen European countries using a sample of repeated cross-sections of individuals from 1983 to 2013 (N=853,482). Austerity is identified using changes in the cyclically-adjusted primary balance. Our dataset allows us to control for several individual-specific characteristics that are known to affect life satisfaction. In our empirical framework, we account for the role of macroeconomic developments and expectations. We find that austerity is inversely associated with life satisfaction, with the effect operating through an economic channel. Specifically, it is only the part of austerity correlated with macroeconomic developments, that is shown to empirically matter. Moreover, we show that the negative effect of austerity is mediated by expectations. Individuals with positive expectations about their future prospects are less affected, in terms of falling life satisfaction, by contractionary fiscal policies.
    Keywords: Expectations; Fiscal Austerity; Government Policy; Life Satisfaction
    JEL: E62 I31 D84
    Date: 2018–01

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