nep-neu New Economics Papers
on Neuroeconomics
Issue of 2020‒06‒15
four papers chosen by
Daniel Houser
George Mason University

  1. The Impact of Working Memory Training on Children’s Cognitive and Noncognitive Skills By Eva M. Berger; Ernst Fehr; Henning Hermes; Daniel Schunk; Kirsten Winkel
  2. Evaluating the Sunk Cost Effect By Ronayne, David; Sgroi, Daniel; Tuckwell, Anthony
  3. Should Children Do More Enrichment Activities? Leveraging Bunching to Correct for Endogeneity By Carolina Caetano; Gregorio Caetano; Eric R. Nielsen
  4. A comparison of individual and collective decision making for standard gamble and time trade-off By Arthur Attema; Han Bleichrodt; Olivier L’haridon; Stefan Lipman

  1. By: Eva M. Berger (Johannes Gutenberg University); Ernst Fehr (University of Zurich); Henning Hermes (Norwegian School of Economics); Daniel Schunk (Johannes Gutenberg University); Kirsten Winkel (Johannes Gutenberg University)
    Abstract: Working memory capacity is thought to play an important role for a wide range of cognitive and noncognitive skills such as fluid intelligence, math, reading, the inhibition of pre-potent impulses or more general self-regulation abilities. Because these abilities substantially affect individuals’ life trajectories in terms of health, education, and earnings, the question of whether working memory (WM) training can improve them is of considerable importance. However, whether WM training leads to improvements in these far-transfer skills is contested. Here, we examine the causal impact of WM training embedded in regular school teaching by a randomized educational intervention involving a sample of 6–7 years old first graders. We find substantial immediate and lasting gains in working memory capacity. In addition, we document relatively large positive effects on geometry skills, reading skills, Raven’s fluid IQ measure, the ability to inhibit pre-potent impulses and self-regulation abilities. Moreover, these far-transfer effects emerge over time and only become fully visible after 12- 13 months. Finally, we document that 3–4 years after the intervention, the children who received training have a roughly 16 percentage points higher probability of entering the academic track in secondary school.
    Date: 2020–06–04
  2. By: Ronayne, David (University of Oxford and Nuffield College); Sgroi, Daniel (University of Warwick, ESRC CAGE Centre and IZA Bonn); Tuckwell, Anthony (Universityof Warwick, ESRC CAGE Centre and the Alan Turing Institute)
    Abstract: We provide experimental evidence of behavior consistent with the sunk cost effect. Subjects who earned a lottery via a real-effort task were given an opportunity to switch to a dominant lottery; yet 23% chose to stick with their dominated lottery. The endowment effect accounts for roughly only one third of the effect. Subjects’ capacity for cognitive reflection is a significant determinant of sunk cost behavior. We also find stocks of knowledge or experience (crystallized intelligence) predict sunk cost behavior, rather than algorithmic thinking (fluid intelligence) or the personality trait of openness. We construct and validate a scale, the “SCE-8”, which encompasses many resources individuals can spend, and offers researchers an efficient way to measure susceptibility to the sunk cost effect.
    Keywords: sunk cost effect ; sunk cost fallacy ; endowment effect ; cognitive ability ; fluid intelligence ; crystallized intelligence ; reflective thinking ; online experiment ; online survey ; psychological scales ; scale validation ; Raven’s progressive matrices ; international cognitive ability resource ; cognitive reflection test ; openness. JEL codes: D91 ; C83 ; C90
    Date: 2020
  3. By: Carolina Caetano; Gregorio Caetano; Eric R. Nielsen
    Abstract: We study the effects of enrichment activities such as reading, homework, and extracurricular lessons on children's cognitive and non-cognitive skills. We take into consideration that children forgo alternative activities, such as play and socializing, in order to spend time on enrichment. Our study controls for selection on unobservables using a novel approach which leverages the fact that many children spend zero hours per week on enrichment activities. At zero enrichment, confounders vary but enrichment does not, which gives us direct information about the effect of confounders on skills. Using time diary data available in the Panel Study of Income Dynamics (PSID), we find that the net effect of enrichment is zero for cognitive skills and negative for non-cognitive skills, which suggests that enrichment may be crowding out more productive activities on the margin. The negative effects on non-cognitive skills are concentrated in higher-income students in high school, consistent with elevated academic competition related to college admissions.
    Keywords: Time use; Enrichment; Bunching; Cognitive skills; Homework; College; Skill development; Non-cognitive skills; Human capital
    JEL: C24 I20 I21 J01
    Date: 2020–05–19
  4. By: Arthur Attema (Erasmus School of Health Policy and Management |Rotterdam]); Han Bleichrodt (Erasmus School of Health Policy and Management |Rotterdam]); 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); Stefan Lipman (Erasmus School of Health Policy and Management |Rotterdam])
    Abstract: Quality-Adjusted Life-Years (QALYs) are typically derived from individual preferences over health episodes. This paper reports the first experimental investigation into the effects of collective decision making on health valuations, using both time trade-off (TTO) and standard gamble (SG) tasks. We investigated collective decision making in dyads, by means of a mixed-subjects design where we control for learning effects. Our data suggest that collective decision making has little effect on decision quality, as no effects were observed on decision consistency and monotonicity for both methods. Furthermore, QALY weights remained similar between individual and collective decisions, and the typical difference in elicited weights between TTO and SG was not affected. These findings suggest that consulting with others has little effect on health state valuation, although learning may have. Additionally, our findings add to the literature of the effect of collective decision making, suggesting that no such effect occurs for TTO and SG.
    Keywords: Health state valuation,collective decision making,standard gamble,time trade-off
    Date: 2020–01–04

This nep-neu issue is ©2020 by Daniel Houser. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.