Behavioural Economics and Public Policy

We welcome suggestions and submissions for the "Behavioural Economics and Public Policy" to be held in ESRI on November 30th. Details of this session below and registration here 

The fifth annual one-day conference on Economics and Psychology will be held on November 30^th2012.

This year's conference is being co-organised by researchers in the ESRI and the UCD Geary Institute and will be held in the ESRI. The purpose of the conference is to strengthen the link between Economics, Psychology and cognate disciplines in Ireland. As with previous conferences, a special theme is the implications of behavioural economics for public policy.

The growing interest in and practical application of behavioural economics across the EU, US and UK increases the importance of Irish public policy makers engaging with this literature and this event will provide an important platform for such engagement.  Previous keynote speakers have included international experts such as Arie Kapteyn (RAND), David Laibson (Harvard) and John O'Doherty (Calttech). Papers from the 2011 session on implications of behavioural economics for public policy in Ireland will be published in a special issue of the Economic and Social Review in November 2012.

The two keynote speakers for this year’s conference are:

Professor Robert Sugden and Dr. David Halpern.

Programme: 

9am - 10.40: Contributed session on behavioural economics  

Michael Dowling (DCU):   "Female Directors and UK Company Acquisitiveness"
Valeria di Cosmo (ESRI): "Estimating the impact of time-of-use pricing on Irish electricity demand"

Richard Roche (NUIM): "Contribution of Neuroscience to Society" 
Denis O’Hora (NUIG): "Cognitive conflict in “Decision Space”: Using Action Dynamics to investigate Decision Making"

BREAK 

11am - 12.30pm: Contributed session on behavioural economics

Brendan Kennely (NUIG): "Assessment systems in economics: A discrete choice experiment"
Michael Daly (Stirling): "Self-Control and Smoking Policy"

David Comerford (Duke and Stirling): "Consumer Sentiment" 

LUNCH 

1.30pm - 2.45pm: Contributed session on behavioural economics

Liam Delaney (Stirling): "Behavioural Economics and Pension Autoenrolment" 

Pete Lunn (ESRI): "Behavioural Economics and Market Failure" 

Keith Walsh (Revenue) "Influencing Taxpayer Behaviour – Applying Behavioural Research in Tax Administration"

BREAK 

3.00pm - 4.00 pm: Keynote session on behavioural economics: I Professor Robert Sugden  

4.00pm - 5.00pm: Keynote session on behavioural economics II: Dr. David Halpern  

ESRI Research Seminar: "Two New Survey Questions for Better Prediction of Turning Points in the Business Cycle"

ESRI Research Seminar: "Two New Survey Questions for Better Prediction of Turning Points in the Business Cycle"

Venue: ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2
Date: TUESDAY 4/12/2012
Time: 4 p.m.
Speaker: Dr. David Comerford, Stirling University.

Abstract: The consumer sentiment index (CS) has been shown to predict macroeconomic outcomes, above and beyond what can be predicted using other economic indicators. The current research suggests a simple means to increase the predictive power of CS. CS is derived from survey questions in the directform: "Will the economy be better or worse next year than it is today?". The authors propose an alternative implied format that asks respondents to "Rate the economy today" and to "Rate how you think the economy will be next year". Though logically equivalent, the implied format and the direct format yield trends that differ strikingly. The authors document that this discrepancy stems from response bias and present evidence that CS would be more informative if it were measured by the implied format.

Biography: David Comerford is a lecturer at Stirling Management School. His research is motivated by the goal to improve decision making by correcting for biases in judgment. As well as this project on perception of change over time, he has ongoing research streams in forecasts of hedonic utility (Journal of Economic Psychology; Patient Education and Counseling) and in perceptions of expenditure (Fiscal Studies). He was a 2010 Fulbright Scholar and an IRCHSS PhD fellow. He holds a PhD in Economics from University College Dublin and was a postdoctoral fellow at Duke University’s Fuqua School of Business.

All welcome, no booking required.

The impact of well-being on income

Estimating the influence of life satisfaction and positive affect on later income using sibling fixed effects

1. Jan-Emmanuel De Neve^a,^b,¹ and 
2. Andrew J. Oswald^c,^d

Author Affiliations

1. Edited by Jose A. Scheinkman, Princeton University, Princeton, NJ, and approved October 15, 2012 (received for review July 10, 2012)

Abstract

The question of whether there is a connection between income and psychological well-being is a long-studied issue across the social, psychological, and behavioral sciences. Much research has found that richer people tend to be happier. However, relatively little attention has been paid to whether happier individuals perform better financially in the first place. This possibility of reverse causality is arguably understudied. Using data from a large US representative panel, we show that adolescents and young adults who report higher life satisfaction or positive affect grow up to earn significantly higher levels of income later in life. We focus on earnings approximately one decade after the person’s well-being is measured; we exploit the availability of sibling clusters to introduce family fixed effects; we account for the human capacity to imagine later socioeconomic outcomes and to anticipate the resulting feelings in current well-being. The study’s results are robust to the inclusion of controls such as education, intelligence quotient, physical health, height, self-esteem, and later happiness. We consider how psychological well-being may influence income. Sobel–Goodman mediation tests reveal direct and indirect effects that carry the influence from happiness to income. Significant mediating pathways include a higher probability of obtaining a college degree, getting hired and promoted, having higher degrees of optimism and extraversion, and less neuroticism.

The cerebral cortex of Albert Einstein

The cerebral cortex of Albert Einstein: a description and preliminary analysis of unpublished photographs

Dean Falk, Frederick E. Lepore, Adrianne Noe

Brain (2012)
doi: 10.1093/brain/aws295
First published online: November 16, 2012

Summary

Upon his death in 1955, Albert Einstein’s brain was removed, fixed and photographed from multiple angles. It was then sectioned into 240 blocks, and histological slides were prepared. At the time, a roadmap was drawn that illustrates the location within the brain of each block and its associated slides. Here we describe the external gross neuroanatomy of Einstein’s entire cerebral cortex from 14 recently discovered photographs, most of which were taken from unconventional angles. Two of the photographs reveal sulcal patterns of the medial surfaces of the hemispheres, and another shows the neuroanatomy of the right (exposed) insula. Most of Einstein’s sulci are identified, and sulcal patterns in various parts of the brain are compared with those of 85 human brains that have been described in the literature. To the extent currently possible, unusual features of Einstein’s brain are tentatively interpreted in light of what is known about the evolution of higher cognitive processes in humans. As an aid to future investigators, these (and other) features are correlated with blocks on the roadmap (and therefore histological slides). Einstein’s brain has an extraordinary prefrontal cortex, which may have contributed to the neurological substrates for some of his remarkable cognitive abilities. The primary somatosensory and motor cortices near the regions that typically represent face and tongue are greatly expanded in the left hemisphere. Einstein’s parietal lobes are also unusual and may have provided some of the neurological underpinnings for his visuospatial and mathematical skills, as others have hypothesized. Einstein’s brain has typical frontal and occipital shape asymmetries (petalias) and grossly asymmetrical inferior and superior parietal lobules. Contrary to the literature, Einstein’s brain is not spherical, does not lack parietal opercula and has non-confluent Sylvian and inferior postcentral sulci.

Key words Albert Einstein Broca’s area parietal lobules inferior third frontal gyrus prefrontal cortex

http://brain.oxfordjournals.org/content/early/2012/11/14/brain.aws295

Is Personality Fixed?

Social Indicators Research

February 2012

Is Personality Fixed? Personality Changes as Much as “Variable” Economic Factors and More Strongly Predicts Changes to Life Satisfaction

• Christopher J. Boyce, 
• Alex M. Wood, 
• Nattavudh Powdthavee

Download PDF (271 KB) View Article

Abstract

Personality is the strongest and most consistent cross-sectional predictor of high subjective well-being. Less predictive economic factors, such as higher income or improved job status, are often the focus of applied subjective well-being research due to a perception that they can change whereas personality cannot. As such there has been limited investigation into personality change and how such changes might bring about higher well-being. In a longitudinal analysis of 8625 individuals we examine Big Five personality measures at two time points to determine whether an individual’s personality changes and also the extent to which such changes in personality can predict changes in life satisfaction. We find that personality changes at least as much as economic factors and relates much more strongly to changes in life satisfaction. Our results therefore suggest that personality can change and that such change is important and meaningful. Our findings may help inform policy debate over how best to help individuals and nations improve their well-being.

2 Year Research Assistant Post ESRI

Research Assistant

(Experiments in Consumer Choice)

The ESRI undertakes a broad programme of empirical social and economic research, with a particular focus on Ireland. An additional opportunity for a Research Assistant to join our programme has arisen and applications are now invited.

The RA will be part of a small team that will undertake computerised forced-choice experiments designed to explore the ability of Irish consumers to choose between complex products. The overall goal of the research programme is to assist policymakers wanting to improve consumers’ experiences in markets with complex products and service contracts.

A broader aim is to expand the ESRI’s work in the area of behavioural and experimental economics.

The successful candidate is likely to have a background in economics, psychology, neuroscience, marketing science, or a related area that involves the quantitative, experimental study of human behaviour.

The RA will be expected to:

Programme computerised forced-choice experiments

Run the experiments on individual subjects from a panel of Irish consumers

Undertake statistical analysis of experimental data

Write up analysis for articles and reports

Co-present findings to audiences of academics and policymakers

RAs also attend and present at academic seminars and conferences, and are expected to engage with policymakers and stakeholders in line with the ESRI’s mission to provide evidence for policy.

The Research Assistantship programme is of two years’ duration. Participants will receive dedicated supervision and appropriate additional training. On completion of the programme, the successful candidate could reasonably expect to have been involved in the preparation of at least four significant publications and will have acquired excellent research skills. It may be possible at this stage, funding permitting, to extend the role or to develop it towards a Ph.D.

How to apply:

An application should be made by email to jobs@esri.ie, containing:

1. A completed application form.

2. A full CV.

3. A brief letter of application outlining any relevant research experience you have had and indicating your areas of interest and why you would wish to work as a Research Assistant in this area.

Closing date for applications is Wednesday, 5 December 2012 . Interviews will take place in mid-December.

Incomplete or late applications will not be processed.

Evidence of 'cherry picking' in studies aiming to identify publication bias

It Does Not Follow: Evaluating the One-

Off Publication Bias Critiques by Francis
(2012a, 2012b, 2012c, 2012d, 2012e, in press)

Author: Uri Simonsohn

Abstract

Francis (2012a, 2012b, 2012c, 2012d, 2012e, in press) attacks individual papers through critiques that apply faulty logic to analyses ironically biased by cherry picking. However well intentioned, the critiques are probably counterproductive to their stipulated goal and certainly unfair to the targeted authors.

Response from Francis

Imagining life with an ostomy: Does a video intervention improve quality-of-life predictions for a medical condition that may elicit disgust? ^☆

• Andrea M. Angott^a, 
• David A. Comerford^a, 
• Peter A. Ubel^b, , 

• ^a Fuqua School of Business, Duke University, Durham, USA
• ^b Fuqua School of Business, Sanford School of Public Policy, and School of Medicine, Duke University, Durham, USA

• http://dx.doi.org/10.1016/j.pec.2012.10.015, How to Cite or Link Using DOI

• Permissions & Reprints

---

Abstract

Objective

To test a video intervention as a way to improve predictions of mood and quality-of-life with an emotionally evocative medical condition. Such predictions are typically inaccurate, which can be consequential for decision making.

Method

In Part 1, people presently or formerly living with ostomies predicted how watching a video depicting a person changing his ostomy pouch would affect mood and quality-of-life forecasts for life with an ostomy. In Part 2, participants from the general public read a description about life with an ostomy; half also watched a video depicting a person changing his ostomy pouch. Participants’ quality-of-life and mood forecasts for life with an ostomy were assessed.

Results

Contrary to our expectations, and the expectations of people presently or formerly living with ostomies, the video did not reduce mood or quality-of-life estimates, even among participants high in trait disgust sensitivity. Among low-disgust participants, watching the video increased quality-of-life predictions for ostomy.

Conclusion

Video interventions may improve mood and quality-of-life forecasts for medical conditions, including those that may elicit disgust, such as ostomy.

Practice implications

Video interventions focusing on patients’ experience of illness continue to show promise as components of decision aids, even for emotionally charged health states such as ostomy.

Keywords

• Ostomy; 
• Video; 
• Quality-of-life; 
• Judgment

The relationship of C-reactive protein to obesity-related depressive symptoms: A longitudinal study

The relationship of C-reactive protein to obesity-related depressive symptoms: A longitudinal study

Michael Daly

DOI: 10.1002/oby.20051

Copyright © 2012 The Obesity Society
Keywords:
Depression;Inflammation;C-reactive protein

Abstract
Obesity has been shown to produce a state of systematic low-grade inflammation that may have detrimental neuropsychiatric effects. This study examined longitudinal associations between obesity, inflammation, and depressive symptoms amongst a cohort of older English adults over 4 years of follow-up. Participants were 3891 obese and non-obese people drawn from the English Longitudinal Study of Ageing (ELSA) [aged 64.9 (SD = 8.8) years, 44.6% men]. Depressive symptoms were assessed at baseline and after 4 years of follow-up using the eight-item Centre for Epidemiological Studies – Depression Scale (CES-D). Approximately 26.3% (N = 1 025) of the sample were categorized as obese at baseline. Obesity at baseline was associated with elevated levels of depressive symptoms at follow-up (P < .001), in analyses that adjusted for depression levels at baseline and sociodemographic and background variables including the prevalence of permanent illness/disability, alcohol consumption, sedentary behavior, and smoking. In addition, C-reactive protein (CRP) concentrations at baseline were independently associated with CES-D depression scores at follow-up (P = .008) in fully adjusted analyses. Subsequent mediation analyses revealed that CRP levels explained approximately 20% of the obesity-related longitudinal change in depression scores. These data suggest that chronic inflammation may be a key determinant of depressive symptoms in obesity.

The Role of Noncognitive Traits in Undergraduate Study Behaviours

• Liam Delaney^a, 
• Colm Harmon^b, 
• Martin Ryan^c, , 

• ^a Division of Economics, University of Stirling, Scotland. Geary Institute, University College Dublin, Ireland
• ^b School of Economics, University of Sydney, Australia. Geary Institute, University College Dublin, Ireland. IZA, Bonn, Germany
• ^c Higher Education Policy Research Unit, Dublin Institute of Technology, Ireland. School of Economics and Geary Institute, University College Dublin, Ireland

• http://dx.doi.org/10.1016/j.econedurev.2012.07.009, How to Cite or Link Using DOI

• Permissions & Reprints

---

Abstract

Undergraduate study behaviours, principally lecture attendance and additional study, are shown to predict better student achievement by many researchers. Despite this, there is not much evidence on the determinants of these behaviours. This is the first paper to explore the determinants of study behaviours across multiple subject areas; and is the first to incorporate students’ noncognitive traits into such a model; that the authors are aware of. This enables the formation of policy that can improve academic achievement by encouraging study behaviour. The results show that students’ noncognitive traits, in particular conscientiousness and future-orientation, are important determinants of lecture attendance and additional study hours. In fact, there is very little that explains undergraduate study behaviour besides noncognitive traits. Standard economic factors, such as family income, financial aid and parental transfers, are not predictive of study behaviours. Some comments are provided on a potential behavioural economics approach to encouraging study behaviours.

Journal of Behavioral Medicine

November 2012

Self-control and its relation to emotions and psychobiology: evidence from a Day Reconstruction Method study

• M. Daly, 
• R. F. Baumeister, 
• L. Delaney, 
• M. MacLachlan

Download PDF (268 KB) View Article

Abstract

This study aimed to ascertain whether self-control predicts heart rate, heart rate variability, and the cortisol slope, and to determine whether health behaviors and affect patterns mediate these relationships. A sample of 198 adults completed the Self-Control Scale (Tangney in J Pers 72:271–322, 2004), and reported their exercise levels, and cigarette and alcohol use. Participants provided a complete account of their emotional experiences over a full day, along with morning and evening salivary cortisol samples and a continuous measure of cardiovascular activity on the same day. High trait self-control predicted low resting heart rate, high heart rate variability, and a steep cortisol slope. Those with high self-control displayed stable emotional patterns which explained the link between self-control and the cortisol slope. The self-controlled smoked less and this explained their low heart rates. The capacity to sustain stable patterns of affect across diverse contexts may be an important pathway through which self-control relates to psychophysiological functioning and potentially health.

R Blogs

A reminder about two good R blogs:

http://rforpublichealth.blogspot.com/

http://diffuseprior.wordpress.com/

Behavioural economics and behavioural change

Below a set of readings for an upcoming one-day session on behavioural economics and behavioural change. 

Kling, Mullainathan and Kongdon (2011). “Public Finance through the lens of behavioural economics” Chapter 2

http://www.brookings.edu/~/media/Press/Books/2011/2/policyandchoice/policyandchoice_book.pdf

Dolan, P., Hallsworth, M., Halpern, D., King, K. and Vlaev, I. (2010). Mindspace: Influencing behaviour through public policy. Cabinet Office: Institute for Government.

http://www.instituteforgovernment.org.uk/our-work/better-policy-making/mindspace-behavioural-economics

House of Lords Report on Behavioural Change:

http://www.publications.parliament.uk/pa/ld201012/ldselect/ldsctech/179/17902.htm

UK Cabinet Office: Applying Behavioural Insights to Health

http://www.cabinetoffice.gov.uk/resource-library/applying-behavioural-insight-health

Sunstein, C. (2011). “Empirically informed regulation”. http://lawreview.uchicago.edu/sites/lawreview.uchicago.edu/files/uploads/78_4/Sunstein_Essay.pdf

Ciriolo, E. (2011). Behavioural economics in the European Commission: past, present and future. 

ESRC DTC Studentships Scotland

Below from Scottish Graduate School of Social Science Website

***** ESRC STUDENTSHIPS AVAILABLE FOR 2013 ACROSS 24 ACADEMIC PATHWAYS *****

Welcome, you should be reading this because you wish to apply for an ESRC studentship through the Scottish Graduate School of Social Science. We run a number of Award Competitions annually through which studentships can be secured. They are:

• The Pathway Competition
• The Advanced Quantitative Methods (AQM) Competition
• The Open Competition
• The Collaborative Competition

The first three competitions are administered through one single process. ESRC studentships in the Pathway Competition are assigned to our 24 pathways and the pathways award them to applicants on the basis of academic merit. If an applicant is proposing using or developing advanced quantitative methods through their research then they may be considered in the AQM Competition in parallel to being considered in the Pathway Competition.

Applicants who are unsuccessful in securing a studentship through the Pathway Competition and/or the AQM Competition are then automatically considered within the Open Competition. ESRC studentships in the Open Competition are awarded by the Scottish Graduate School, again on the basis of academic merit, through a cross-pathway competition.

Further details on how to apply can be found here.

The Collaborative Award Competition is managed separately and details can be found here.

Simonsohn paper on fabrication and replication

Just Post It: The Lesson from Two Cases of Fabricated Data Detected by Statistics Alone

Uri Simonsohn 

University of Pennsylvania - The Wharton School
November 13, 2012

Abstract:      
I argue that journals should require authors to post the raw data supporting their published results. I illustrate some of the benefits of doing so by describing two cases of fraud I identified exclusively through statistical analysis of reported means and standard deviations. Analyses of the raw data provided important confirmation of the initial suspicions, ruling out benign explanations (e.g., reporting errors; unusual distributions), identifying additional signs of fabrication, and also ruling out one of the suspected fraudster’s explanations for his anomalous results. If we want to reduce fraud, we need to require authors to post their raw data.

Number of Pages in PDF File: 32

Keywords: Data transparency, fake data, science, judgment and decision making

working papers series 

Weekend Links

1. Saltire Scholarships for Scottish Students to go overseas

2. HBR post on what data can't tell you about consumers

3. Important paper by Shah, Mullainathan and Shafir on attentional consequences of poverty 

4. Behavioural Change month at UCL 

5. Details for Stirling students looking to apply for ESRC 

6. Students wishing to applying to ESRC in UK more generally in any area should look here 

7. Ipsos-MORI survey in Scotland about acceptability of nudge-type policies 

8. TED-Talk by Professor Sarah-Jayne Blakemore on adolescent brain

9. Special issue of Journal of Behavioral Decision Making on individual differences in decision making competence

10. Prof Arie Kapteyn to lead new economic and social research center at USC

11. National Academies Press: Using Science as Evidence in Public Policy 

12. Sarah Stewart-Brown VOX article on whether fruit and vegetables are good for mental and physical health

13. JDM paper by Rao and Li providing experimental evidence for a range of intertemporal choice effects

14. Cokely et al (2012) a new risk literacy test "The Berlin Numeracy Test"

15. If you were able to time travel, would you visit the past or the future? A recent JDM paper looked at preferences

16. Good article on current debate on glucose depletion and willpower

17. RAND Working Paper by Brown et al on extent to which people know the value of annuities as barrier to annuity-holding

18. EU Commission Green paper "Towards an integrated European market for card, internet and mobile payments"

19. John Van Reenan outlines the books that inspired him on LSE Review of Books

20. Warriors against Rational Choice (WARC): Drunk crocodile riding edition 

21. Policy Insights from Behavioral Economics: A FED book from 2007 with interesting essays (h/t Clare)

The Financial Cost of Sadness

It's not immediately clear how negative feelings should impact on the tendency to seek immediate rather than delayed rewards. One perspective is that reward insensitivity is a characteristic of depression that may lead those with the condition not to seek out rewarding stimuli (whether in the form of activities or in spending money). Sadness has also been linked to closer more systematic evaluation of details of choice/of a task. Both of these ideas would suggest that sadness could reduce levels of discounting. However, there is also a literature describing how negative feelings can impair self-control in the paper below Lerner and Weber suggest that sadness induces feelings of loss and the tendency to quickly seek out reward, even if this is risky. This explanation appears to be more of a corrective response mechanism rather than a tendency that would characterize those suffering from psychological distress more generally. And this is what the authors found, participants were far less likely to wait for a reward when a sad mood had been induced (accepting 13-34% less money in this instance).

The authors do not mention the role of belief about moods in determining the pattern of results observed. One interesting idea following from this paper is that this response to sadness could potentially be augmented if people were led to believe their negative feelings were frozen and not amenable to change by immediate gratification (see Tice et al. (2001): "if you feel bad, do it") . This intervention may effectively break or at least attenuate the link between sadness and discounting.

This aside, as the authors note, this study is important as there is a substantial gap in the literature with no published studies (according to the authors) examining the impact of negative feelings on time preferences.


The Financial Cost of Sadness

 Abstract

"We hypothesized a phenomenon that we term myopic misery. According to our hypothesis, sadness increases impatience and creates a myopic focus on obtaining money immediately instead of later. This focus, in turn, increases intertemporal

discount rates and thereby produces substantial financial costs. In three experiments, we randomly assigned participants to sad- and neutral-state conditions, and then offered intertemporal choices. Disgust served as a comparison condition in Experiments 1 and 2. Sadness significantly increased impatience: Relative to median neutral-state participants, median sad state participants accepted 13% to 34% less money immediately to avoid waiting 3 months for payment. In Experiment 2, impatient thoughts mediated the effects. Experiment 3 revealed that sadness made people more present biased (i.e., wanting something immediately), but not globally more impatient. Disgusted participants were not more impatient than neutral participants, and that lack of difference implies that the same financial effects do not arise from all negative emotions. These results show that myopic misery is a robust and potentially harmful phenomenon."

ESRC Studentships at Stirling

Economic and Social Research Council

2013 PhD Studentship opportunities are available at Stirling in the following areas:

Accounting & Finance	Health
Business Management	Social Care
Economics	Social Policy
Economics & Social History	Social Work
Education	Socio-Legal Studies & Criminology
Environment, Climate Change and Energy	Sociology
Families: Relationships & Demographic Change

If you are interested in applying for a PhD funding from ESRC we recommend that you attend the session below:

Increasing your chances of securing ESRC PhD funding 
Wednesday 5 December 2012

12.00-13.00

Enterprise Zone, University Library

The following will be addressed:

·         Thinking about your project

·         Identifying a supervisor

·         The applications process

·         Timelines

For more information visit   http://www.stir.ac.uk/graduateschool/pg-study-stirling/funded-studentship-opps/

Spaces are limited – sign up at http://tinyurl.com/esrc2013