nep-neu New Economics Papers
on Neuroeconomics
Issue of 2020‒11‒30
four papers chosen by

  1. Development of locus of control: A comparison between adolescents from middle- and lower-socioeconomic class By Seemanti Ghosh
  2. Can enhancing consciousness of control ideology mitigate the impact of poverty on perseverance? By Seemanti Ghosh
  3. Motivated Beliefs and Anticipation of Uncertainty Resolution By Christoph Drobner
  4. What Determines the Enforcement of Newly Introduced Social Norms: Personality Traits or Economic Preferences? Evidence from the COVID-19 Crisis By Daniel Schunk; Valentin Wagner

  1. By: Seemanti Ghosh
    Abstract: Locus of control is one’s perceived causality between action and reinforcements, with two extreme perceptions being internal and external. It is a key non-cognitive attribute that has serious influence on education and labour market outcomes, one’s behavioural response to adversities in life and wellbeing in general. However, a child is not born with any perception of control. Control expectancies are shaped through life’s experiences that are heavily determined by one’s socioeconomic class. This study compares the developmental trajectory of control expectancies between adolescents from middle- and lower-class households in India. The results suggest that as the adolescents from middle-class feel more in control of their lives as they grow older therefore aligning their locus internally. Though the adolescents from lower-class feel more in control early on in their lives, this sentiment declines much faster, equalizing with the middle-class group at age ten and diverging thereafter, significantly shifting towards external alignment of locus of control. This study extends our knowledge about biases in perception of control among adolescents from lower-socioeconomic class in a developing country like India. This study also highlights the paucity of longitudinal studies in this literature.
    Keywords: non-cognitive, locus of control, socioeconomic class, education, labour, inequality
    JEL: D91 I24 I31 J24 O12 O15
    Date: 2020–11
  2. By: Seemanti Ghosh
    Abstract: Poverty has a significant negative impact on perseverance, it has a psychological influence on people that make people give up sooner. This study conjectures that this impact is mediated by locus of control. In this article, I evaluate a lab-in-the-field experiment conducted with at-risk adolescents in India, where the impact of poverty is emulated through priming, and it is shown that simply shifting one’s consciousness of the generalized expectation of reinforcements towards more internal to self, the negative impact of poverty on perseverance can be mitigated. However, enough shift in locus of control to mitigate the impact of poverty priming in a lab setting happens effectively only when the intervention is delivered by a relatable role model.
    Keywords: experiment, non-cognitive, grit, perseverance, locus of control, poverty, inequality
    JEL: C91 C93 D91 I24 I28 I31 J24 O12
    Date: 2020–11
  3. By: Christoph Drobner (Technical University of Munich)
    Abstract: When do people update beliefs about ego-relevant information optimistically? Based on previous empirical and theoretical work, I postulate that optimistic belief updating is only activated when subjects expect no immediate resolution of uncertainty because subjects cannot savor direct belief utility from inflated beliefs when they anticipate the resolution of uncertainty. I test this hypothesis in a laboratory experiment, where subjects update beliefs about their relative performance in an IQ test, by manipulating subjects' expectations about uncertainty resolution. The results show that subjects in fact only engage in optimistic belief updating when they expect no immediate resolution of their true performance. This finding highlights an important dimension of the supply side of motivated beliefs and contributes to resolve the puzzling evidence on optimistic belief updating. Moreover, I document that subjects ex-post rationalize information by manipulating their stated beliefs about the ego-relevance of the IQ test depending on the valence of information. This result suggests an additional channel that subjects use to protect their ego utility, which goes beyond biases in information processing.
    Keywords: Motivated beliefs, Optimistic belief updating, Ex-post rationalization, Bayes' rule, Expectations about uncertainty resolution
    JEL: C91 D83 D84
    Date: 2020–11
  4. By: Daniel Schunk (Johannes Gutenberg University); Valentin Wagner (Johannes Gutenberg University)
    Abstract: Social norms govern human behavior and usually change slowly over time. While individuals’ willingness to sanction others is decisive for the enforcement of social norms and thus social stability, little is known about individual sanctioning behavior related to newly introduced social norms. During the COVID-19 pandemic, governments have used various tools to rapidly and actively introduce the new norm of wearing a face mask; this offers a unique setting to study the determinants of individuals’ willingness to enforce a cooperation norm. In a nationwide online survey in Germany, we find that higher levels of conscientiousness and neuroticism, but none of the economic preferences (time and risk), are significantly and robustly associated with higher norm enforcement behavior. Furthermore, there is a strong relationship behavior between supervisors’ and their subordinates’ norm enforcement, and we observe that females sanction less harshly than men. Our results shed light on the origins of individual compliance with and enforcement of newly introduced public policy measures that are meant to increase solidarity via the explicit shaping of new cooperation norms.
    Keywords: Social norm enforcement, personality traits, risk and time preferences, COVID-19
    JEL: D81 D90 H12 H40
    Date: 2020–11–16

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