nep-neu New Economics Papers
on Neuroeconomics
Issue of 2020‒04‒20
two papers chosen by

  1. Cognitive Biases: Mistakes or Missing Stakes? By Benjamin Enke; Uri Gneezy; Brian Hall; David Martin; Vadim Nelidov; Theo Offerman; Jeroen van de Ven
  2. Perseverance, Passion, and Poverty: Examining the association between grit and reading achievement in high-poverty schools By Heleen Hofmeyr

  1. By: Benjamin Enke; Uri Gneezy; Brian Hall; David Martin; Vadim Nelidov; Theo Offerman; Jeroen van de Ven
    Abstract: Despite decades of research on heuristics and biases, empirical evidence on the effect of large incentives – as present in relevant economic decisions – on cognitive biases is scant. This paper tests the effect of incentives on four widely documented biases: base rate neglect, anchoring, failure of contingent thinking, and intuitive reasoning in the Cognitive Reflection Test. In pre-registered laboratory experiments with 1,236 college students in Nairobi, we implement three incentive levels: no incentives, standard lab payments, and very high incentives that increase the stakes by a factor of 100 to more than a monthly income. We find that cognitive effort as measured by response times increases by 40% with very high stakes. Performance, on the other hand, improves very mildly or not at all as incentives increase, with the largest improvements due to a reduced reliance on intuitions. In none of the tasks are very high stakes sufficient to de-bias participants, or come even close to doing so. These results contrast with expert predictions that forecast larger performance improvements.
    Keywords: cognitive biases, incentives
    JEL: D01
    Date: 2020
  2. By: Heleen Hofmeyr (Department of Economics, Stellenbosch University)
    Abstract: This paper examines whether school characteristics moderate the association between grit and reading achievement in a sample of Grade 6 learners in high-poverty contexts. The analysis makes use of data from 2,383 learners distributed across 60 township and rural schools in three provinces of South Africa. Indicators of school functionality are used to split the sample of schools into three groups (low, medium, and high functionality) and separate models of reading achievement are estimated for each group. The econometric analysis points to evidence of variation in the association between grit and reading achievement by school functionality, with a stronger association estimated for learners in more functional schools. The major contributions of this paper are as follows: Firstly, this paper is one of only a handful of studies that estimate the relationship between grit and academic achievement in a middle- income country, and the first to estimate this relationship among primary school learners in an African context. Second, the results provide empirical evidence in support of the hypothesis that school characteristics interact with non-cognitive skills to produce learning outcomes, a relationship that has received scant attention in the literature to date.
    Keywords: Socio-emotional skills, grit, perseverance, school poverty
    JEL: I20 I24 I29
    Date: 2020

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