nep-neu New Economics Papers
on Neuroeconomics
Issue of 2022‒12‒12
five papers chosen by

  1. Buying control? ‘Locus of control’ and the uptake of supplementary health insurance By Bonsang, Eric; Costa-Font, Joan
  2. Insensitive Investors By Constantin Charles; Cary D. Frydman; Mete Kilic
  3. A Note on Motivated Cognition and Discriminatory Beliefs By Lasse S. Stötzer; Florian Zimmermann
  4. It Makes a Village: Allomaternal Care and Prosociality By Alessandra Cassar; Alejandrina Cristia; Pauline Grosjean; Sarah Walker
  5. Human Capital Development: New Evidence on the Production of Socio-emotional Skills By Mark Mitchell; Marta Favara; Catherine Porter; Alan Sánchez

  1. By: Bonsang, Eric; Costa-Font, Joan
    Abstract: This paper analyses the relationship between locus of control (LOC) and the demand for supplementary health insurance. Drawing on longitudinal data from Germany, we find robust evidence that individuals having an internal LOC are more likely to take up supplementary private health insurance (SUPP). The increase in the probability to have a SUPP due to one standard deviation increase in the measure of internal LOC is equivalent to an increase in household income by 14 percent. Second, we find that the positive association between health and SUPP becomes small and insignificant when we control for LOC, suggesting that LOC might be an unobserved individual trait that can partly explain advantageous selection into SUPP. Third, we find comparable results using data from Australia, which enhances the external validity of our results.
    Keywords: private health insurance; health care use; risk aversion; locus of control; positive selection; supplementary insurance; Germany; Australia
    JEL: I12 I18
    Date: 2022–12–01
  2. By: Constantin Charles; Cary D. Frydman; Mete Kilic
    Abstract: We show theoretically that the weak transmission of beliefs to actions induces a strong bias in basic asset pricing tests. In particular, expected returns can appear to decline in risk when investors weakly transmit their payoff expectations into willingness to pay. We experimentally test this prediction and find that subjects exhibit an extremely weak transmission of beliefs to actions, which generates a negative risk-return relation. We argue that the weak transmission is due to cognitive noise and demonstrate that cognitive noise causally affects the risk-return relation. Our results highlight the importance of incorporating weak transmission into belief-based asset pricing models.
    Keywords: investor behavior, cognitive noise, portfolio choice
    Date: 2022
  3. By: Lasse S. Stötzer; Florian Zimmermann
    Abstract: In this note, we provide evidence that motivated reasoning can be a source of discriminatory beliefs. We employ a representative survey experiment where we exogenously manipulate the presence of a need for justification of anti-social behavior towards an out-group. We provide causal evidence that survey participants devalue members of an out-group to justify taking away money from the group. Our results speak to a long-standing debate on the causes of racism and discrimination and suggest an important role of motivated cognition.
    Keywords: discrimination, stereotypes, racism, motivated reasoning, beliefs
    JEL: D01
    Date: 2022
  4. By: Alessandra Cassar (University of San Francisco, Chapman University and CEGA); Alejandrina Cristia (Laboratoire de Sciences Cognitives et Psycholinguistique, ENS, EHESS, CNRS, PSL University); Pauline Grosjean (Department of Economics, UNSW and CEPR); Sarah Walker (Department of Economics, UNSW)
    Abstract: A recent hypothesis suggests that an impetus for human cooperation could have emerged from the needs of mothers to elicit and sustain help from others, i.e. allomaternal care, for the purpose of bringing offspring to maturity. We design a novel economic experiment to elucidate the relationship between allomaternal care and cooperative behavior among a random sample of 820 adults and 200 children in the Solomon Islands. Our results show that allomaternal care, especially by non-kin, nurtures adult reciprocity and altruism, and impersonal prosociality among mothers. We also document socio-cognitive benefits to children from child care by non-kin, based on daylong vocalizations analyzed using a multilingually-trained neural network. Further analysis utilizing cross-cultural ethnographic data shows a positive relationship between allomaternal care and societal orientation toward trust. Altogether, our findings suggest an important role for allomaternal care - especially by non-kin - in supporting societal cooperation. Classification JEL: I15, O15, Z13
    Keywords: Allomaternal care, Altruism, Child vocalizations, Dictator game, Reciprocity
    Date: 2022–11
  5. By: Mark Mitchell; Marta Favara; Catherine Porter; Alan Sánchez
    Abstract: We estimate a dynamic model of socio-emotional skill development between ages 8-22 for a Peruvian cohort born in 1994. At age 8 there is no wealth gradient, in contrast to cognitive skills. However, by age 12 inequalities emerge and widen through age 19, driven by differential household investments, and cross-productivity with cognitive skills. In early adulthood, we separate socio-emotional skills into two distinct domains – social skills and task effectiveness - that evolve differently, and are differently correlated with risky behaviours such as smoking or taking drugs. Unequal initial household resources perpetuate inequality across generations through cognitive and task effectiveness skills.
    Keywords: Human capital, child development, dynamic factor analysis, socio-emotional skills
    JEL: C38 J13 J24 O15 O54
    Date: 2022

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