nep-neu New Economics Papers
on Neuroeconomics
Issue of 2023‒11‒20
three papers chosen by
Daniel Houser, George Mason University

  1. Do Non-cognitive Skills Improve in Adulthood? An empirical analysis of the relationship between age and non-cognitive skills (Japanese) By KUME Koichi; TSURU Kotaro; SANO Shinpei; YASUI Kengo
  2. The Social Side of Early Human Capital Formation: Using a Field Experiment to Estimate the Causal Impact of Neighborhoods By John List; Fatemeh Momeni; Michael Vlassopoulos; Yves Zenou
  3. Cognitive Energy Cost of Informed Decisions By Michele Vodret

  1. By: KUME Koichi; TSURU Kotaro; SANO Shinpei; YASUI Kengo
    Abstract: Non-cognitive skills are factors that determine labor market outcomes. Although the importance of pre-school years in acquiring these skills has been emphasized, the question of whether they continue to grow after entering the workforce has not been adequately examined. In psychology, some studies have attempted to understand the relationship between age and non-cognitive skills using cross-sectional data, but they have not been able to control for factors other than age and gender. Therefore, this paper uses individual data from the “Internet Survey on Intergenerational Education and Training, and Cognitive and Non-cognitive Abilities†conducted in 2019 by the Research Institute of Economy, Trade and Industry (RIETI) to test whether age is related to non-cognitive ability even when controlling for factors that would be common in the same age cohort. Specifically, we regressed non-cognitive skills (the Big Five, grit, self-esteem, and locus of control) on age, gender, and factors affecting the cohort (total number of elementary school hours, jobs-to-applicants ratio at graduation, economic index at graduation, and negative shocks to particular generations in employment). The results robustly showed that age was significantly positively related to agreeableness, consciousness, emotional stability, grit, self-esteem, and locus of control, even after controlling for a variety of factors, and that the average level of these non-cognitive abilities increases with age.
    Date: 2023–10
  2. By: John List; Fatemeh Momeni; Michael Vlassopoulos; Yves Zenou
    Abstract: This study explores the role of neighborhoods on human capital formation at an early age. We do so by estimating the spillover effects of an early childhood intervention on the educational attainment of a large sample of disadvantaged children in the United States. We document large spillover effects on the cognitive skills of children living near treated children, which amount to approximately 40% of the direct treatment effects. Interestingly, these spillover effects are localized and decrease with the spatial distance to treated neighbors. We do not find evidence of spillover effects on non-cognitive skills. Perhaps our most novel insight is the underlying mechanisms at work: the spillover effect on cognitive scores is very localized and seems to operate through the child's social network, mostly between treated kids. We do not find evidence that parents' or children's social networks are effective for non-cognitive skills. Overall, our results reveal the importance of public programs and neighborhoods on human capital formation at an early age, highlighting that human capital accumulation is fundamentally a social activity.
    Date: 2023
  3. By: Michele Vodret
    Abstract: Time irreversibility in neuronal dynamics has recently been demonstrated to correlate with various indicators of cognitive effort in living systems. Using Landauer's principle, which posits that time-irreversible information processing consumes energy, we establish a thermodynamically consistent measure of cognitive energy cost associated with belief dynamics. We utilize this concept to analyze a two-armed bandit game, a standard decision-making framework under uncertainty, considering exploitation, finite memory, and concurrent allocation to both game options or arms. Through exploitative, prediction-error-based belief dynamics, the decision maker incurs a cognitive energy cost. Initially, we observe the rise of dissipative structures in the steady state of the belief space due to time-reversal symmetry breaking at intermediate exploitative levels. To delve deeper into the belief dynamics, we liken it to the behavior of an active particle subjected to state-dependent noise. This analogy enables us to relate emergent risk aversion to standard thermophoresis, connecting two apparently unrelated concepts. Finally, we numerically compute the time irreversibility of belief dynamics in the steady state, revealing a strong correlation between elevated - yet optimized - cognitive energy cost and optimal decision-making outcomes. This correlation suggests a mechanism for the evolution of living systems towards maximally out-of-equilibrium structures.
    Date: 2023–10

This nep-neu issue is ©2023 by Daniel Houser. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.