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on Neuroeconomics |
| By: | Entorf, Antonia (IZA); Dohmen, Thomas (University of Bonn) |
| Abstract: | Personality traits, preferences, and attitudes significantly influence labor market outcomes, and these non-cognitive skills are shaped by the social environment. While curriculum interventions can impact these skills, the effect of compulsory education on non-cognitive skills is less well understood. This study investigates the impact of extending compulsory education by examining educational reforms in four low- and middle-income countries. Utilizing cross-sectional data from the World Bank’s 2012/2013 initiative, we analyze the within-country variation in compulsory education years. Our findings indicate that increased compulsory education decreases emotional stability, grit, hostile attribution bias, patience, and willingness to take risks, while enhancing openness to experience and alternative solution or consequential thinking. |
| Keywords: | personality, wage returns, education, non-cognitive skills, economic preferences |
| JEL: | J24 I20 I26 D91 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17832 |
| By: | Stans, Renske (Netherlands Court of Audit); Ehrmantraut, Laura (Federal Statistical Office); Siemers, Malin (University of Bonn); Pinger, Pia (University of Cologne) |
| Abstract: | Do employers seek to attract individuals with more education because it enhances human capital or because it signals higher levels of pre-existing traits? We experimentally vary master's degree completion rates on applicant résumés and examine how this influences candidates' desirability and employer perceptions of their productive characteristics. Our findings show that while a completed master's degree increases desirability, an incomplete master's degree is perceived by human resource managers as less favorable than a bachelor's degree. This suggests that employers prefer candidates with higher education mainly because they view the degree as a signal of pre-existing productive traits. Consistent with this, employers perceive both cognitive and non-cognitive traits as stronger in master graduates but non-cognitive traits as weaker in master dropouts compared to bachelor's degree holders. Overall, perceived cognitive and non-cognitive traits play a larger role in determining a candidate's attractiveness than expertise. This paper thus provides causal evidence on the origins of the education premium. |
| Keywords: | returns to education, beliefs, labor demand, labor productivity, signaling, wages |
| JEL: | I26 J23 J24 J31 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17732 |
| By: | Michael Cuna; Lenka Fiala; Min Sok Lee; John A. List; Sutanuka Roy |
| Abstract: | Understanding the role of preferences, beliefs, and constraints on social and wealth inequities is a key unlock for economic growth. This study focuses on the inter-relationship between risk and ambiguity preferences of mothers, their early childhood investments, and their children’s outcomes. To do so, we elicit ambiguity attitude and risk aversion preference parameters from more than 6000 randomly sampled mothers from nearly 500 villages in Rajasthan, India. Across several measures of mothers’ investment in nutrition of their children between the ages of 0-6, we find a robust and stable positive correlation of estimated ambiguity attitude and risk aversion parameters with maternal investments: the more risk and ambiguity averse the mother, the greater her investments. Such investments are correlated with better children’s cognitive and non-cognitive skills, as mothers with greater risk and ambiguity aversion have children with superior skills, even after accounting for socio-economic differences. Importantly, the positive effect of ambiguity and risk aversion on early-life outcomes can attenuate the negative impact of proxies of socio-economic disadvantage, such as illiteracy of the mothers, belonging to historically discriminated social groups, no exposure to radio, television, or zero access to mobile phones for all measures of cognitive and non-cognitive early-life skills. |
| JEL: | D91 I14 I15 I24 J13 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33610 |
| By: | Tekleselassie, Tsegay (Wellesley College); Witte, Marc J. (Vrije Universiteit Amsterdam); Radbruch, Jonas (Humboldt University Berlin); Hensel, Lukas (Peking University); Isphording, Ingo E. (IZA) |
| Abstract: | We conduct a field experiment with job seekers to investigate how feed- back influences job search and labor market outcomes. Job seekers who re- ceive feedback on their ability compared to other job seekers update their beliefs and increase their search effort. Specifically, initially underconfident individuals intensify their job search. In contrast, overconfident individuals do not adjust their behavior. Moreover, job seekers’ willingness-to-pay (WTP) for feedback predicts treatment effects: only among underconfident individuals with positive WTP, we observe significant increases in both search effort and search success. We present suggestive evidence that this pattern arises from heterogeneity in how job seekers perceive the relevance of relative cognitive ability to job search returns. While the intervention appears cost-effective, job seekers’ WTP remains insufficient to cover its costs. |
| Keywords: | willingness-to-pay, feedback, overconfidence, job search, field experiment |
| JEL: | C93 J24 J64 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17761 |
| By: | Eric V. Edmonds; Priya Mukherjee; Nikhilesh Prakash; Nishith Prakash; Shwetlena Sabarwal |
| Abstract: | We examine the impact of a randomized therapy intervention on Nepali adolescents at risk of school dropout. Our study is the largest of its kind (N = 1, 707) and is novel in that participation does not require a preexisting diagnosis. Ninety percent of those offered therapy participated, with younger adolescents demonstrating higher compliance. Among those who complied, therapy significantly reduced psychological distress, improved emotional regulation, and enhanced life perspective, even in individuals without baseline mental health issues. However, these improvements in well-being did not lead to increased school attendance or better cognitive performance, suggesting that additional interventions may be necessary to enhance educational engagement in low-resource settings. |
| JEL: | I12 I15 I25 I31 O12 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33677 |
| By: | Yuval Salant; Jorg L. Spenkuch; David Almog |
| Abstract: | We explore the role of memory for choice behavior in unfamiliar environments. Using a unique data set, we document that decision makers exhibit a "memory premium." They tend to choose in-memory alternatives over out-of-memory ones, even when the latter are objectively better. Consistent with well-established regularities regarding the inner workings of human memory, the memory premium is associative, subject to interference and repetition effects, and decays over time. Even as decision makers gain familiarity with the environment, the memory premium remains economically large. Our results imply that the ease with which past experiences come to mind plays an important role in shaping choice behavior. |
| JEL: | D01 D03 D87 D91 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33649 |