nep-neu New Economics Papers
on Neuroeconomics
Issue of 2021‒10‒25
four papers chosen by

  1. The Cost of Worrying About an Epidemic: Ebola Concern and Cognitive Function in the US By Christian Apenbrink
  2. Employees’ emotional, cognitive, and behavioral responses to increasing statutory retirement ages By Oude Mulders, Jaap; Henkens, C.J.I.M.; van Dalen, Hendrik Peter
  3. The Cognitive Load of Financing Constraints: Evidence from Large-Scale Wage Surveys By Clémence Berson; Raphaël Lardeux; Claire Lelarge
  4. Attention Overload By Matias D. Cattaneo; Paul Cheung; Xinwei Ma; Yusufcan Masatlioglu

  1. By: Christian Apenbrink (Bonn Graduate School of Economics, University of Bonn)
    Abstract: Do emotional responses to the spread of an infectious disease affect the quality of economic decision-making? In the context of an episode of heightened public concern about Ebola in the US in October 2014, I document that worrying about the possibility of an epidemic can impair cognitive function. My analysis relies on data from cognitive tests administered as part of a wave of survey interviews by a large US panel study, which I combine with measures of local concern about Ebola based on internet search volume. For identification, I exploit temporal and spatial variation in Ebola concern caused by the emergence of four cases of Ebola that were diagnosed in the US. Using proximity to the US cases as an instrumental variable, I show that the local level of Ebola concern individuals are exposed to at the time and place of the interview reduces their scores on the cognitive test. In additional analyses, I find no indication of fear-induced selection effects that could plausibly explain these results. Moreover, proximity to subsequent Ebola locations is unrelated to test scores for interviews conducted before the emergence of the first US case. My findings indicate that emotional responses to epidemics can entail a temporary cognitive cost even for individuals for whom the actual health risk never materializes.
    Keywords: Worry, Fear, Emotions, Ebola, Epidemics, Cognitive Function
    JEL: D91 D80 D01
    Date: 2021–10
  2. By: Oude Mulders, Jaap; Henkens, C.J.I.M. (Tilburg University, School of Economics and Management); van Dalen, Hendrik Peter (Tilburg University, School of Economics and Management)
    Date: 2021
  3. By: Clémence Berson; Raphaël Lardeux; Claire Lelarge
    Abstract: In this paper, we take advantage of the implicit cognitive exercise available in standard Labor Force Surveys to propose a new indicator of financing constraints which is based on the cognitive load they generate (Mullainathan and Shafir, 2013). Survey respondents are requested to report their monthly wages, which we compare to their administrative, fiscal counterparts. We propose a well-defined index of worker-level uncertainty, which filters out their potential rounding behavior and reporting biases. We estimate it using unsupervised ML/EM techniques and find that workers tend to perceive their own wages with a degree of uncertainty of around 10%. Through the lens of a simple rational signal extraction model, this amounts to estimates of workers' attention ranging from 30% to 84% depending on their wage, education, tenure and gender. Most importantly, we show that the attention of the lowest paid 30% of workers is cyclical and increases steadily by 17 percentage points in the ten days preceding payday, before immediately dropping on that day, which, through the lens of a simple model, is indicative of end-of-month financing liquidity constraints. Furthermore, this pattern reveals that the cognitive cost induced by these financing constraints arises from the not too concave (or convex) costs of achieving high levels of attention, and the convex costs of maintaining it over time.
    Keywords: Behavioral Inattention, Cognitive Costs, Wage Volatility, Poverty and Financing Constraints
    JEL: C83 D14 I32 J31
    Date: 2021
  4. By: Matias D. Cattaneo; Paul Cheung; Xinwei Ma; Yusufcan Masatlioglu
    Abstract: We introduce an Attention Overload Model that captures the idea that alternatives compete for the decision maker's attention, and hence the attention frequency each alternative receives decreases as the choice problem becomes larger. Using this nonparametric restriction on the random attention formation, we show that a fruitful revealed preference theory can be developed, and provide testable implications on the observed choice behavior that can be used to partially identify the decision maker's preference. Furthermore, we provide novel partial identification results on the underlying attention frequency, thereby offering the first nonparametric identification result of (a feature of) the random attention formation mechanism in the literature. Building on our partial identification results, for both preferences and attention frequency, we develop econometric methods for estimation and inference. Importantly, our econometric procedures remain valid even in settings with large number of alternatives and choice problems, an important feature of the economic environment we consider. We also provide a software package in R implementing our empirical methods, and illustrate them in a simulation study.
    Date: 2021–10

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.