nep-neu New Economics Papers
on Neuroeconomics
Issue of 2020‒09‒21
five papers chosen by

  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. Conflict Economics and Psychological Human Needs By Thomas Gries; Veronika Müller
  3. Learning in a Small/Big World By Leung, B. T. K.
  4. Intergenerational Effects of Early-Life Advantage: Lessons from a Primate Study By Amanda M. Dettmer; James J. Heckman; Juan Pantano; Victor Ronda; Stephen J. Suomi
  5. Does market interaction erode moral values? By Björn Bartling; Ernst Fehr; Yagiz Özdemir

  1. By: Eva M. Berger; Ernst Fehr; Henning Hermes; Daniel Schunk; Kirsten Winkel
    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.
    Keywords: Human capital, cognitive skills, noncognitive skills, working memory training
    JEL: I20 I21 J24
    Date: 2020–06
  2. By: Thomas Gries (Paderborn University); Veronika Müller (Paderborn University)
    Abstract: The basic approach in conflict economics, to explain motives and conditions for civil strife, is based on the assumption of choice. Wars, civil conflicts, or terrorism are thus analyzed as outcomes of goal-driven choices according to underlying incentives and constraints. Because conflict involves choices between nonviolent and violent alternatives, it is perceived as a pure result of strategic choice – that is, calculated, rational thinking with the aim to achieve profitable ends. While this would imply that rational agents are primarily motivated by material gains, we argue that individuals may also join groups and use violence for psychological reasons – and this choice is not subject to irrationality. Factors such as group belongingness, threat, a shared group-identity, and self-esteem are important determinants in explaining violent mobilization. In this regard, the current paper postulates that agents make foremost choices in order to serve their mental preferences, or in psychological terms, their fundamental human needs, i.e. needs that address the human drive to survive, to understand and control their environment, to find their role and purpose in life, and to feel accepted and efficacious in their choices and actions. We reviewed a vast amount of interdisciplinary literature and identified three need dimensions: existential, relational, and self-related human needs. Each of these needs is shaped by internal determinants, such as agent´s dispositions, and by external determinants, such as economic, social, political, or environmental factors. Therefore, to properly understand why individuals join rebel groups and are willing to accept a high level of personal risk to advance their groups´ goals, we have to consider, beyond economic incentives, also their psychological human needs.
    Keywords: Conflict economics; Psychological human needs; Reconciliation; Individual decision-making
    JEL: D74 D91 I31 Z1
    Date: 2020–09
  3. By: Leung, B. T. K.
    Abstract: This paper looks into how learning behavior changes with the complexity of the inference problem and the individual's cognitive ability, as I compare the optimal learning behavior with bounded memory in small and big worlds. A learning problem is a small world if the state space is much smaller than the size of the bounded memory and is a big world otherwise. I show that first, optimal learning behavior is almost Bayesian in small worlds but is significantly different from Bayesian in big worlds. Second, ignorant learning behaviors, e.g., availability heuristic, correlation neglect, persistent over-confident, are never optimal in small worlds but could be optimal in big worlds. Third, different individuals are bound to agree in small worlds but could disagree and even be bound to disagree in big worlds. These results suggest that the complexity of a learning problem, relative to the cognitive ability of individuals, could explain a wide range of abnormalities in learning behavior.
    Keywords: Learning, Bounded Memory, Bayesian, Ignorance, Disagreement
    JEL: D83 D91
    Date: 2020–09–08
  4. By: Amanda M. Dettmer; James J. Heckman; Juan Pantano; Victor Ronda; Stephen J. Suomi
    Abstract: This paper uses three decades of studies with Rhesus monkeys to investigate the intergenerational effects of early life advantage. Monkeys and their offspring were both randomly assigned to be reared together or apart from their mothers. We document significant intergenerational effects of maternal presence. We also estimate, for the first time, the intergenerational complementarity of early life advantage, where the intergenerational effects of maternal rearing are only present for offspring that were mother-reared. This finding suggests that parenting is the primary mechanism driving the intergenerational effects. Our paper demonstrates how studies of primates can inform human development.
    JEL: I12 Y80
    Date: 2020–08
  5. By: Björn Bartling; Ernst Fehr; Yagiz Özdemir
    Abstract: The widespread use of markets leads to unprecedented material well-being in many societies. We study whether market interaction, as a side effect, erodes moral values. An encompassing understanding of the virtues and vices of markets, including their possible impact on moral values, is necessary to make informed decisions on the spheres in society where the allocation and incentive functions of markets should exercise their power, and where this may not be desirable. In a seminal and highly influential paper, Falk and Szech (2013) provide experimental data that seem to suggest that “market interaction erodes moral values.” Although we replicate their main treatment effect, we show that additional treatments are necessary to corroborate their conclusion. These treatments, however, reveal that repeated play and not market interaction causes the erosion of moral values. Our paper thus shows that neither Falk and Szech’s data nor our data support the claim that market interaction erodes moral values.
    Keywords: Market interaction, moral values
    JEL: C91 D02 D62 D63
    Date: 2020–08

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