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on Neuroeconomics |
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Issue of 2024‒08‒12
five papers chosen by |
| By: | Nunnari, Salvatore (Bocconi University); Proto, Eugenio (University of Glasgow); Rustichini, Aldo (University of Minnesota) |
| Abstract: | Rational choice theories assume that voters accurately assess the outcomes of policies. However, many important policies—such as regulating prices and introducing Pigouvian taxation—yield outcomes through indirect or equilibrium effects that may differ from their direct effects. Citizens may underestimate these effects, leading to a demand for bad policy, that is, opposition to reforms that would increase welfare or support for reforms that would decrease it. This appreciation might be linked to cognitive functions, raising important research questions: Do cognitive abilities influence how individuals form preferences regarding policies, especially untried reforms? If so, what is the underlying mechanism? We use a simple theoretical framework and an experiment to show that enhanced cognitive abilities may lead to better policy choices. Moreover, we emphasize the crucial role of beliefs about other citizens' cognitive abilities. These findings have important policy implications as they suggest that educational programs developing cognitive skills or interventions increasing trust in others' understanding could improve the quality of democratic decision-making in our societies. |
| Keywords: | voting, policy reform, political failure, cognition, experiment |
| JEL: | C90 D72 D91 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17112 |
| By: | Madeline Duhon; Lia Fernald; Joan Hamory; Edward Miguel; Eric Ochieng; Michael W. Walker |
| Abstract: | This study exploits experimental variation in parent human capital (early-life school-based deworming) and a shock to schooling (extended Covid closures) to estimate how these factors interact in the production of child human capital within a sample of 3, 500 Kenyan 3-8 year olds. Parents with additional exposure to childhood deworming have children with improved human capital, including in health, non-cognitive development, and cognition; cognitive scores are +0.26 standard deviation units higher among treated parents' school-age children, only prior to school closures. Findings are interpreted through a model where home-based and school inputs are complements in the production of child cognition. |
| JEL: | I00 J24 O15 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32617 |
| By: | Eric A. Hanushek; Andrew J. Morgan; Steven G. Rivkin; Jeffrey C. Schiman; Ayman Shakeel; Lauren Sartain |
| Abstract: | Using rich Texas administrative data, we estimate the impact of middle school principals on post-secondary schooling, employment, and criminal justice outcomes. The results highlight the importance of school leadership, though striking differences emerge in the relative importance of different skill dimensions to different outcomes. The estimates reveal large and highly significant effects of principal value-added to cognitive skills on the productive activities of schooling and work but much weaker effects of value-added to noncognitive skills on these outcomes. In contrast, there is little or no evidence that middle school principals affect the probability a male is arrested and has a guilty disposition by raising cognitive skills but strong evidence that they affect these outcomes through their impacts on noncognitive skills, especially those related to the probability of an out-of-school suspension. In addition, the principal effects on the probability of engagement in the criminal justice system are much larger for Black than for nonBlack males, corresponding to race differences in engagement with the criminal justice system. |
| JEL: | I20 J45 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32642 |
| By: | Andrew Caplin; Andrei Gomberg; Joyce Sadka |
| Abstract: | We demonstrate that cognitive constraints produce injustice in its most paradigmatic form: incorrect verdicts in judicial trials. Responding to a request for help, we conducted a field study in Mexican labor courts in which time pressure on the judges leads to their making mistakes, many of which are appealed. All we did was to index pages to random case files to help judges quickly find relevant information. We made no other changes whatsoever. Our treatment greatly reduced successful appeals, fully 50% in complex cases, and resulted in judicial opinions that were shorter and more on point. These findings have already informed recent reforms in Mexico's labor court procedures and have broader applicability. |
| JEL: | D8 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32587 |
| By: | Boone, Christopher (University of Massachusetts Amherst); Kaila, Heidi (World Bank); Sahn, David E. (Cornell University) |
| Abstract: | We examine the impact of a six-fold increase in the global vanilla price on smallholder vanilla-farming households in Madagascar. The price increase leads to sizable gains in household assets and significant improvements in adult psychological well-being, cognitive performance, and optimism about the economy. In contrast, we find no significant effects on children's health or schooling. Given substantial evidence from the literature that improvements in household economic resources can have large effects on children over the long run, the lack of shorterterm effects in this setting may reflect the time-varying nature of the impact or the need for additional complementary investments. |
| Keywords: | export commodities, agriculture, human capital, crime |
| JEL: | O12 O13 I15 I31 Q12 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17085 |