nep-neu New Economics Papers
on Neuroeconomics
Issue of 2020‒06‒22
seven papers chosen by
Daniel Houser
George Mason University

  1. The Effects of Cognitive and Noncognitive Abilities on Wages in Japan (Japanese) By YASUI Kengo; SANO Shinpei; KUME Koichi; TSURU Kotaro
  2. The Impact of Working Memory Training on Children’s Cognitive and Noncognitive Skills By Berger, Eva M.; Fehr, Ernst; Hermes, Henning; Schunk, Daniel; Winkel, Kirsten
  3. Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs By Grevenbrock, Nils; Groneck, Max; Ludwig, Alexander; Zimper, Alexander
  4. Neurometrics applied to banknote and security features design By Rubén Ortuño; José M. Sánchez; Diego Álvarez; Miguel López; Fernando León
  5. The Importance of Cognitive Domains and the Returns to Schooling in South Africa: Evidence from Two Labor Surveys By Plamen Nikolov; Nusrat Jimi
  6. On the Causes and Consequences of Deviations from Rational Behavior By Dainis Zegners; Uwe Sunde; Anthony Strittmatter
  7. Investigating human visual behavior by hidden Markov models in the design of marketing information By Jerzy Grobelny; Rafal Michalski

  1. By: YASUI Kengo; SANO Shinpei; KUME Koichi; TSURU Kotaro
    Abstract: This paper provides the first evidence in Japan on how both cognitive and non-cognitive abilities affect individual wages. Using data from "Internet Survey on Intergenerational Education and Training, and Cognitive and Non-cognitive Abilities" conducted by the Research Institute of Economy, Trade and Industry, we employ test scores from the cognitive reflection test (CRT) and literacy and numeracy scores from OECD online assessments as cognitive abilities, and Big Five, self-esteem, and locus of control as measures of non-cognitive abilities, in order to estimate the effect of cognitive and non-cognitive abilities using OLS and quantile regression. The results are as follows. We first find a robust result in a significant positive effect of extroversion and self-esteem on wages for any different sample restriction choices or estimation methods. Our estimates also suggest the positive effect of conscientiousness and emotional stability and the negative effect of agreeableness and openness to experience on wages, depending on the estimations by gender and wage quartile. Furthermore, we confirm the important role of cognitive abilities, which is particularly demonstrated in the significant positive effect of CRT, and the fact that numeracy has a greater effect than literacy on wages.
    Date: 2020–04
  2. By: Berger, Eva M. (Johannes Gutenberg University of Mainz); Fehr, Ernst (University of Zurich); Hermes, Henning (Dept. of Economics, Norwegian School of Economics and Business Administration); Schunk, Daniel (Johannes Gutenberg University of Mainz); Winkel, Kirsten (Johannes Gutenberg University of Mainz)
    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 1213 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.
    Keywords: Working Memory; Education
    JEL: J00
    Date: 2020–06–08
  3. By: Grevenbrock, Nils; Groneck, Max; Ludwig, Alexander; Zimper, Alexander
    Abstract: This paper investigates the roles psychological biases play in deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cog- nitive weakness increase and relative optimism decrease with age. We document that direct measures of cognitive weakness and optimism share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of subjective survival beliefs. Our main finding is that cognitive weakness rather than op- timism is an increasingly important contributor to the well-documented overestimation of survival chances in old age.
    Keywords: Cognition; Con rmatory Bias; Optimism; Pessimism; Probability Weighting Function; Subjective Survival Beliefs
    JEL: D83 D91 I10
    Date: 2020–05
  4. By: Rubén Ortuño (Banco de España); José M. Sánchez (Banco de España); Diego Álvarez (Banco de España); Miguel López (Banco de España); Fernando León (Banco de España)
    Abstract: The aim of this paper is to present a methodology on the application of neuroanalysis to the design of banknotes and security features. Traditionally, evaluation of the perception of banknotes is based on explicit personal responses obtained through questionnaires and interviews. The implicit measures refer to methods and techniques capable of capturing people's implicit mental processes. Neuroscience has shown that, in most brain processes regulating emotions, attitudes, behaviours and decisions, human consciousness does not intervene. That is to say, these implicit processes are brain functions that occur automatically and without conscious control. The methodology on neuroanalysis can be applied to the design of banknotes and security features, and used as an effective analysis tool to assess people's cognitive processes, namely: visual interest, attention to certain areas of the banknote, emotions, motivation and the mental load to understand the design and level of stimulation. The proposed neuroanalysis methodology offers a criterion for making decisions about which banknote designs and security features have a more suitable configuration for the public. It is based on the monitoring of conscious processes, using traditional explicit measures, and unconscious processes, using neurometric techniques. The neuroanalysis methodology processes quantifiable neurometric variables obtained from the public when processing events, such as eye movement, sight fixation, facial expression, heart rate variation, skin conductance, etc. A neuroanalysis study is performed with a selected group of people representative of the population for which the design of a banknote or security features is made. In the neurometric study, suitably prepared physical samples are shown to the participants to collect their different neurometric responses, which are then processed to draw conclusions.
    Keywords: neuroscience, eye tracking, biometrics, neurometrics, banknotes, neurodesign, security feature, perception, human behaviour
    JEL: C13 D87 E42
    Date: 2020–04
  5. By: Plamen Nikolov; Nusrat Jimi
    Abstract: Numerous studies have considered the important role of cognition in estimating the returns to schooling. How cognitive abilities affect schooling may have important policy implications, especially in developing countries during periods of increasing educational attainment. Using two longitudinal labor surveys that collect direct proxy measures of cognitive skills, we study the importance of specific cognitive domains for the returns to schooling in two samples. We instrument for schooling levels and we find that each additional year of schooling leads to an increase in earnings by approximately 18-20 percent. Furthermore, we estimate and demonstrate the importance of specific cognitive domains in the classical Mincer equation. We find that executive functioning skills are important drivers of earnings in the rural sample, whereas higher-order cognitive skills are more important for determining earnings in the urban sample.
    Date: 2020–06
  6. By: Dainis Zegners; Uwe Sunde; Anthony Strittmatter
    Abstract: This paper presents novel evidence for the prevalence of deviations from rational behavior in human decision making - and for the corresponding causes and consequences. The analysis is based on move-by-move data from chess tournaments and an identification strategy that compares behavior of professional chess players to a rational behavioral benchmark that is constructed using modern chess engines. The evidence documents the existence of several distinct dimensions in which human players deviate from a rational benchmark. In particular, the results show deviations related to loss aversion, time pressure, fatigue, and cognitive limitations. The results also demonstrate that deviations do not necessarily lead to worse performance. Consistent with an important influence of intuition and experience, faster decisions are associated with more frequent deviations from the rational benchmark, yet they are also associated with better performance.
    Date: 2020–05
  7. By: Jerzy Grobelny; Rafal Michalski
    Abstract: The research demonstrates the use of hidden Markov models (HMMs) in analyzing fixation data recorded by an eye-tracker. The visual activity was registered while performing pairwise comparisons of simple marketing messages. The marketing information was presented in a form of digital leaflets appearing on a computer screen and differed in the components’ arrangement and graphical layout. Better variants were selected by clicking on them with a mouse. A simulation experiment was performed to determine best HMMs in terms of information criteria. Seven selected models were presented in detail, four of them graphically illustrated and thoroughly analyzed. The identified hidden states along with predicted transition and emission probabilities allowed for the description of possible subjects’ visual behavior. Hypotheses about relations between these strategies and marketing message design factors were also put forward and discussed.
    Keywords: Eye-tracking; Cognitive modeling; Visual presentation; Digital signage; Advertisement; Human factors; Ergonomics
    JEL: C00 D01 D03 D40 D81 D83 D87 D91 L15 L81 L82 L86 M31 M37
    Date: 2020–08–15

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