nep-neu New Economics Papers
on Neuroeconomics
Issue of 2023‒07‒17
five papers chosen by

  1. The origins of cognitive skills and non-cognitive skills: the long-term effect of in-utero rainfall shocks in India By Chang, Grace; Favara, Marta; Novella, Rafael
  2. Paying Moms to Stay Home: Short and Long Run Effects on Parents and Children By Jonathan Gruber; Kristiina Huttunen; Tuomas Kosonen
  3. Gambling habits and Probability Judgements in a Bayesian Task Environment By David L. Dickinson; Parker Reid
  4. The relationship between the Big Five personality traits and earnings: evidence from a meta analysis By Vella, Melchior
  5. Dark versus Light Personality Types and Moral Choice By David L. Dickinson

  1. By: Chang, Grace; Favara, Marta; Novella, Rafael
    Abstract: Skills are an important predictor of labour, education, and wellbeing outcomes. Understanding the origins of skills formation is important for reducing future inequalities. This paper analyses the effect of shocks in-utero on human capital outcomes in childhood and adolescence in India. Combining historical rainfall data and longitudinal data from Young Lives, we estimate the effect of rainfall shocks in-utero on cognitive and non-cognitive skills development over the first 15 years of life. We find negative effects of rainfall shocks on receptive vocabulary at age 5, and on mathematics and non-cognitive skills at age 15. The negative effects on cognitive skills are driven by boys, while the effect for both cognitive and non-cognitive skills are driven by children of parents with lower education, suggesting that prenatal shocks might exacerbate pre-existing inequalities. Our findings support the implementation of policies aiming at reducing inequalities at very early stages in life.
    Keywords: in-utero; India; rainfall shocks; skills formation
    JEL: J24
    Date: 2022–01–01
  2. By: Jonathan Gruber (MIT); Kristiina Huttunen (Aalto University, Helsinki GSE, VATT and IZA); Tuomas Kosonen (VATT Institute for Economic Research and Finnish Centre of Excellence in Tax Systems Research)
    Abstract: We study the impacts of a policy designed to reward mothers who stay at home rather than join the labor force when their children are under age three. We use regional and over time variation in child home care allowance to show that home care allowance decreases maternal employment in both the short and long term, with almost three-quarters of the supplement amount offset by lost labor income. The effects are large enough for the existence of home care benefit system to explain the higher child penalty in Finland than comparable nations. Home care benefits also negatively affect the early childhood cognitive test results of children at the age of five, increase the likelihood of choosing vocational rather than academic secondary education track, and increase youth crimes. We confirm that the mechanism of action is changing work/home care arrangements by studying a a day care fee (DCF) reform had the opposite effect of raising incentives to work. We find that this policy increased the labor force participation of mothers and participation of children to day care, and improved child early test and schooling outcomes. This parallel set of findings suggests that on average in Finland, shifting child care from the home to the market increases labor force participation and improves child outcomes.
    Keywords: home care allowance, employment, child development, schooling
    JEL: J13 J21 J38
    Date: 2022–11
  3. By: David L. Dickinson; Parker Reid
    Abstract: Little is known about how gamblers estimate probabilities from multiple information sources. This paper reports on a preregistered study that administered an incentivized Bayesian choice task to n=465 participants (self-reported gamblers and non-gamblers). The task elicits subjective probability estimates for a particular event given the base rate probability and new evidence information for that event, which allows for an assessment of one’s probability assessment accuracy. Furthermore, we also estimate the degree to which both sources of information are weighted in forming subjective probability estimates. Our data failed to support our main hypotheses that experienced online gamblers would be more accurate Bayesian decision-makers compared to non-gamblers, that gamblers experienced in games of skill (e.g., poker) would be more accurate than gamblers experienced only in non-skill games (e.g., slots), or that accuracy would differ in females compared to males. Pairwise comparisons between these types of participants also failed to show any difference in decision weights placed on the two information sources. Exploratory analysis, however, revealed interesting effects related to self-reported gambling frequency. Specifically, more frequent online gamblers had lower Bayesian accuracy than infrequent gamblers. Also, those scoring higher in a cognitive reflection task were more Bayesian in weighting information sources when making belief assessments. While we report no main effect of sex on Bayesian accuracy, exploratory analysis found that the decline in accuracy linked to self-reported gambling frequency was stronger for females. Decision modeling finds a decreased weight place on new evidence (over base rate odds) in those who showed decreased accuracy, which suggests a proper incorporation of new information into one’s probability assessments is important for more accurate assessment of probabilities in uncertain environments. Our results link frequency of gambling to worse performance in the critical probability assessment skills that should benefit gambling success (i.e., in skill-based games). Additional research is needed to better understand why a higher frequency of gambling is associated with lower Bayesian accuracy and why this association is greater in females compared to males. Key Words: Gambling, Bayes Rule, Probability Judgements, Cognitive Reflection
    Date: 2023
  4. By: Vella, Melchior
    Abstract: The role and importance of personality traits in determining labour market outcomes remain largely contested. This meta-analytic review addresses the question of whether the Big Five traits are related to earnings. A comprehensive literature search identified 52 studies that met the inclusion criteria (1, 307 regression coefficients). The findings indicate that Openness to Experience, Conscientiousness and Extraversion are positively correlated with earnings, while Agreeableness and Neuroticism are inversely correlated with earnings. The study finds that the magnitudes of the earnings effects are modest to small, show a high degree of heterogeneity and are largely scaled down after accounting for publication bias. The main contributors to the observed heterogeneity are identified as being socioeconomic background, occupation, cognitive ability, and educational attainment. The study suggests that environmental factors play an important role in the relationship between personality traits and earnings, so omitting relevant factors from the empirical model could lead to omitted variable bias in the estimates.
    Date: 2023–02–28
  5. By: David L. Dickinson
    Abstract: Dark personality traits have been linked to behaviors commonly understood as unethical, such as fraud, bribe-taking, and marital infidelity. Presumably, more “light” personality traits may be associated with lesser tendencies to be unethical, but many individuals also possess both light and dark trait characteristics. This paper reports results from a preregistered study of over 2400 participants who completed validated short-form personality instruments to assess dark and light personality trait measures—the dark tetrad and a light “triad” of 3 personality dimensions were measured. Furthermore, participants completed 3 tasks of interest that contribute to an understanding or one’s ethics: a task assessing prosociality, a task that presents a monetary temptation to be dishonest, and a hypothetical moral dilemma task. The results overall support the hypotheses that dark personality traits predict lower levels of prosociality, higher likelihood of dishonesty, and an increased willingness to make immoral choices overall. Potential mechanisms and implications are examined. Key Words: Ethics, dark personality, moral choice, experiments
    Date: 2023

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