nep-neu New Economics Papers
on Neuroeconomics
Issue of 2018‒12‒24
four papers chosen by

  1. Wage premia for skills: The complementarity of cognitive and non-cognitive skills By Marta Palczynska
  2. Some unpleasant consequences of testing at length By Brunello, Giorgio; Crema, Angela; Rocco, Lorenzo
  3. Using Response Times to Measure Ability on a Cognitive Task By Aleksandr Alekseev
  4. All Over the Map A Worldwide Comparison of Risk Preferences * By Olivier L'Haridon; Ferdinand Vieider

  1. By: Marta Palczynska
    Abstract: This paper provides evidence on the association between individuals' cognitive abilities, personality traits, and earnings. I find that cognitive skills and certain personality traits are complements. In particular, I find that cognitive skills and emotional stability are complementary, with neurotic individuals having significantly lower returns to their cognitive skills. Furthermore, my results indicate that agreeableness, neuroticism, and – surprisingly – grit are penalised signi?cantly in the labour market; and that there is a positive relationship between conscientiousness and wages. Finally, I observe that, contrary to previous findings, women and men have similar returns to personality traits. I use well-established measures of cognitive skills and personality: namely, competence tests from the PIAAC survey to assess cognitive skills, as well as the Big Five inventory and the Grit scale to assess personality traits.
    Keywords: cognitive skills, personality traits, social skills, earnings
    JEL: J16 J24 J31
    Date: 2018–12
  2. By: Brunello, Giorgio; Crema, Angela; Rocco, Lorenzo
    Abstract: Using Italian data on standardized test scores, we show that the performance decline associated with question position is heterogeneous across students. This fact implies that the rank of individuals and classes depends on the length of the test. Longer tests may also exhibit larger gaps between the variance of test scores and the variance of underlying ability. The performance decline is correlated with both cognitive and non-cognitive abilities and there is also evidence that those with better parental background experience a smaller decline than those with poorer background. Therefore, the gap between the two groups widens in longer tests.
    Keywords: low stake tests,position of questions,cognitive and non-cognitive skills,Italy
    JEL: I21
    Date: 2018
  3. By: Aleksandr Alekseev (Economic Science Institute, Chapman University)
    Abstract: I show how using response times as a proxy for effort coupled with an explicit process-based model can address a long-standing issue of how to separate the effect of cognitive ability on performance from the effect of motivation. My method is based on a dynamic stochastic model of optimal effort choice in which ability and motivation are the structural parameters. I show how to estimate these parameters from the data on outcomes and response times in a cognitive task. In a laboratory experiment, I find that performance on a Digit-Symbol test is a noisy and biased measure of cognitive ability. Ranking subjects by their performance leads to an incorrect ranking by their ability in a substantial number of cases. These results suggest that interpreting performance on a cognitive task as ability may be misleading.
    Keywords: cognitive ability, test scores, response times, drift-diffusion model, choice-process data
    JEL: C24 C41 C91 D91 J24
    Date: 2018
  4. By: Olivier L'Haridon (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Ferdinand Vieider (Department of Economics, University of Reading)
    Abstract: We obtain rich measurements of risk preferences for 2939 subjects across 30 countries, and use the data to paint a picture of the distribution of risk preferences across the globe using structural equation models. Reference-dependence and likelihood-dependence are found to be important everywhere. Model parameters in non-Western countries differ systematically from those in Western countries, with poorer countries substantially more risk tolerant than rich countries on average. We qualify previous findings on gender effects and cognitive ability by showing how they mainly impact likelihood-dependence. We further add novel evidence on the correlation between risk preferences and study major. Whereas we confirm previous results on observable characteristics of subjects explaining little of overall preference heterogeneity, a few macroeconomic indicators can explain a considerable part of the between-country heterogeneity.
    Keywords: risk preferences,cultural comparison,prospect theory
    Date: 2018

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