nep-neu New Economics Papers
on Neuroeconomics
Issue of 2021‒06‒28
five papers chosen by
Daniel Houser
George Mason University

  1. Wage premia for skills: the complementarity of cognitive and non-cognitive skills By Marta, Palczyńska
  2. Personality and affects: Researchers with emotional intelligence By Hernando-Jorge, Laura; Azagra-Caro, Joaquín M.; Tur Porcar, Ana M.
  3. Cognitive Ability, Cognitive Aging, and Debt Accumulation By Marco Angrisani; Jeremy Burke; Arie Kapteyn
  4. The Dynamics of Inattention in the (Baseball) Field By Archsmith, James; Heyes, Anthony; Neidell, Matthew; Sampat, Bhaven
  5. Digital Addiction By Hunt Allcott; Matthew Gentzkow; Lena Song

  1. By: Marta, Palczyńska
    Abstract: Purpose - The main purpose of this paper is to assess the degree of complementarity between cognitive skills and non-cognitive skills, and to evaluate their joint impact on individual wages. Design/methodology/approach – The author uses a survey representative of the Polish working-age population with well-established measures of cognitive and non-cognitive skills. Findings - Non-cognitive skills are important in the labour market, not only as separate factors that influence wages, but as complements to cognitive skills. Specifically, the analysis showed that the more neurotic an individual is, the lower his or her returns to cognitive skills are. Social skills were not shown to be complementary to cognitive skills in Poland, unlike the recent results in the United States. Originality/value - To the best of author’s knowledge, this is the first study to provide evidence that neurotic individuals have lower returns to cognitive skills. It also tests the existence of the complementarity between social and cognitive skills.
    Keywords: earnings, cognitive skills, non-cognitive skills, social skills, gender differences
    JEL: J16 J24 J31
    Date: 2020
  2. By: Hernando-Jorge, Laura; Azagra-Caro, Joaquín M.; Tur Porcar, Ana M.
    Abstract: Scientific excellence is one of the main sources of wealth and economic development in modern society. This is due to the knowledge generated by scientists, which is the result of an interaction between cognitive, emotional and social factors. Indeed, emotional factors and the way of relating to one’s surroundings are linked to the ability to make plans to achieve proposed goals. This study aims to study the relationships between personality traits, emotional intelligence (EI) and positive and negative affect among the scientific population. There were 7,463 researchers that took part, who have authored publications included in the Web of Science (WoS) from 2013 to 2016. The results show significant relationships between EI, personality traits and affects, and the weight of personality traits in predicting EI, with an R2 close to 40%. Furthermore, positive affect positively moderates the relationship between the desirability of personality traits and EI, whereas negative affect moderates this relationship negatively. The results are discussed as regards the importance of handling positive emotional states in order to regulate emotional experiences with a view to increasing productivity, via the publications considered in the WoS.
    Date: 2021–06–21
  3. By: Marco Angrisani (University of Southern California, Center for Economic and Social Research); Jeremy Burke (University of Southern California, Center for Economic and Social Research); Arie Kapteyn (University of Southern California, Center for Economic and Social Research)
    Abstract: In the past few decades, financial products target to consumers have become increasingly complex and recent evidence suggests that older adults are entering retirement with more debt than previous generations. We examine how cognitive ability is related to debt burdens among older adults and whether this relationship has changed over time with the increasingly complex financial landscape. Using data from the Health and Retirement Study spanning 1998 to 2014, we find that cognitive ability is an important predictor of debt burdens in older age and that, in more complex financial environments, individuals with higher cognitive ability have taken on higher debt levels than individuals with lower cognitive ability. In a complementary analysis using data from 2015 to 2019 drawn from the Understanding America Study, we find similar results and evidence that the relationship between cognitive ability and debt exposure is driven by financial sophistication. Our findings are broadly inconsistent with financial intermediaries pushing increasingly complicated financial products onto unsophisticated borrowers. However, we find that even higher cognitive ability individuals may have difficulty managing their debt burdens in more complex environments – they hold less total wealth, less liquid wealth, and are more likely to have debt levels that exceed half their assets than their counterparts prior to the expansion in complexity. All told, we find that individuals with higher cognitive ability disproportionately increased their debt burdens during the increase in financial product complexity, and that subsequently they were more financially fragile than similar individuals in previous cohorts.
    Date: 2020–09
  4. By: Archsmith, James (University of Maryland); Heyes, Anthony (University of Ottawa); Neidell, Matthew (Columbia University); Sampat, Bhaven (Columbia University)
    Abstract: Recent theoretical and empirical work characterizes attention as a limited resource that decision-makers strategically allocate. There has been less research on the dynamic interdependence of attention: how paying attention now may affect performance later. In this paper, we exploit high-frequency data on decision-making by Major League Baseball umpires to examine this. We find that umpires not only apply greater effort to higher-stakes decisions, but also that effort applied to earlier decisions increases errors later. These findings are consistent with the umpire having a depletable 'budget' of attention. There is no such dynamic interdependence after breaks during the game (at the end of each inning) suggesting that even short rest periods can replenish attention budgets. We also find that an expectation of higher stakes future decisions leads to reduced attention to current decisions, consistent with forward-looking behavior by umpires aware of attention scarcity.
    Keywords: rational inattention, dynamic decision-making, cognitive capital, decision fatigue, bounded rationality, behavioral economics
    JEL: D83 D91
    Date: 2021–06
  5. By: Hunt Allcott; Matthew Gentzkow; Lena Song
    Abstract: Many have argued that digital technologies such as smartphones and social media are addictive. We develop an economic model of digital addiction and estimate it using a randomized experiment. Temporary incentives to reduce social media use have persistent effects, suggesting social media are habit forming. Allowing people to set limits on their future screen time substantially reduces use, suggesting self-control problems. Additional evidence suggests people are inattentive to habit formation and partially unaware of self-control problems. Looking at these facts through the lens of our model suggests that self-control problems cause 31 percent of social media use.
    JEL: D12 D61 D90 D91 I31 L86 O33
    Date: 2021–06

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