Monday Links: Behavioural Economics in Australia

Not intended as exhaustive and suggestions welcome.

USydney, UNSW and UTS in Sydney all have Economics Schools with several staff working on behavioural topics. Ditto the College of Business and Economics at ANU and the Economics groups at UMelbourne and Monash. The Queensland Behavioural Economics (QuBE) at the Queensland University of Technology has an active research group.

The Society for Risk Analysis has an Australian and New Zealand branch

The IAREP country representative for Australia is Brad Jorgensen

Sydney Morning Herald article on the New South Wales version of the UK Nudge Unit.

ASIC, Australia’s corporate, markets and financial services regulator, has released work recently on behavioural economics.

There is a behavioural economics meet-up group in Sydney that I found very well-attended and useful.

Recent Australian radio debate about behavioural economics in particular nudge.

Why is psychology relevant for the workplace?

As an MSc student in Stirling, you have the opportunity to take Professor Alex Wood's "Psychology of Work" class in the first term. It explores the importance and role of psychology in the workplace and how practitioners apply psychological theories to issues in the workplace, with the aim of increasing organisational effectiveness and ensuring the satisfaction of people at work.  

One of the assignments I submitted this year tackles the broad sweeping question of "Why is psychology relevant for the workplace?" and it provides a detailed summary of five key areas within the British Psychological Society Curriculum for Occupational Psychology: employee engagement and relations; selection and assessment; training; learning and development; and the design of the work environment. I conclude with a discussion of the role personality plays within the work contexts.

The purpose of this post it twofold: to give MSc applicants an insight into this fascinating topic; and to give seasoned readers a resource that they can use in their research or in the design of course syllabus. 

Click here to download the paper in .pdf. 

To summarise:

1. Employee relations and engagement, defined as “managing fairly and getting the best out of people” (Gamble, 2006), has been seen through the lens of a master servant relationship, the mechanistic worker relationship and now the individual employee relationship.  
2. Selection and assessment focuses mainly on the need to have people in positions who either have the characteristics required for effective job performance or the capacities for learning and development.
3. In order to have organisational success, interactive and relative training programmes need to be developed, as do effective and validated career development and appraisal programmes for employees. 
4. Careful consideration also needs to be placed into the design of the work environment to ensure that it matches the capabilities of human performance and minimises the risks of work to health and well-being. 
5. Though any individual behaviour is not very predictable from personality, general behaviour is. It is determined by both the situation and the stable individual differences, and individuals’ can also be identified by the extent to which their personalities vary across situations.

Behavioural Economics Replication Project

I've highlighted the work of the Many Labs Replication Project on the blog before. Since then, Many Labs 2 and 3 have also launched, but the replication efforts have so far remained confined to psychology.

Until now. The Behavioural Economics Replication Project prediction market opens today and will run for 11 days (April 15-26). The studies being replicated are drawn from 16 articles from American Economic Review and 2 from Quarterly Journal of Economics, two of the premier journals in economics. The purpose of the site is to allow people to bet on whether they think the effects in the original articles will be replicated. I could not find details on the website about when the replications will actually be run.

While I am interested in prediction markets like many nerds, I wonder what the added value of it is here. I wouldn't be shocked to see one or two null effects out of 18 but I would be pretty surprised if there are studies in journals like QJE and AER which everyone thinks won't replicate. That's the beauty of prediction markets though, they force everyones cards onto the table.

More details below:

Who will do the replications?

The replications will be conducted by research teams from Caltech, the University of Innsbruck, the Stockholm School of Economics and the National University of Singapore.

What does it mean for a study to replicate?

Of course, prediction market design requires that event outcomes can be clearly said to have either occurred or not. Therefore, we define a result as being replicated if the statistical method used in the original paper yields a p-value <0 .05.="" a="" corresponding="" if="" is="" not="" p-value="" replicated="" result="" the="">0.05.

What are the prediction markets for?

In the prediction markets the traders can give their assessment of whether a result will be replicated or not. For each study, a separate prediction market is run to predict the outcome of the replication. In each market one asset is traded whose payoff depends on whether the result/hypothesis will be replicated or not.

Market Setup

You can trade on the outcome of each of the 18 replication studies in a web-based market interface. This webpage (www.sciencepredictionmarkets.com) provides information on the 18 studies (and the specific hypotheses therein) which are to be replicated.

Your initial endowment is 100 Tokens. You can trade in as many of the 18 markets as you want to. However, any residual Tokens not invested will have no value after markets have closed.

Once you have identified a market (study) that you would like to trade in, click on the corresponding button to access it.

Then you will see two possibilities to trade:

• Increase position by # Tokens:
  If you believe that the study will be replicated according to the criteria outlined above, you can invest here.
• Decrease position by # Tokens:
  If you believe that the study will not be replicated according to the criteria outlined above, you can invest here.

Childhood Self-Control and Unemployment Throughout the Life Span: Evidence From Two British Cohort Studies

Our new Psychological Science paper is available here - details below

Childhood Self-Control and Unemployment Throughout the Life Span: Evidence From Two British Cohort Studies

Michael Daly1,2
Liam Delaney1,2
Mark Egan1
Roy F. Baumeister3,4
1Behavioural Science Centre, University of Stirling
2UCD Geary Institute, University College Dublin
3Department of Psychology, Florida State University
4King Abdulaziz University


The capacity for self-control may underlie successful labor-force entry and job retention, particularly in times of economic uncertainty. Analyzing unemployment data from two nationally representative British cohorts (N = 16,780), we found that low self-control in childhood was associated with the emergence and persistence of unemployment across four decades. On average, a 1-SD increase in self-control was associated with a reduction in the probability of unemployment of 1.4 percentage points after adjustment for intelligence, social class, and gender. From labor-market entry to middle age, individuals with low self-control experienced 1.6 times as many months of unemployment as those with high self-control. Analysis of monthly unemployment data before and during the 1980s recession showed that individuals with low self-control experienced the greatest increases in unemployment during the recession. Our results underscore the critical role of self-control in shaping life-span trajectories of occupational success and in affecting how macroeconomic conditions affect unemployment levels in the population.

Behavioural Economics at Australian Securities and Investments Commission

Very interesting page outlining recent reports commissioned by the Australian Securities and Investments Commission and carried out by the Queensland Behavioural Economics Group

Report 427 Investing in hybrid securities: Explanations based on behavioural economics (REP 427) provides insight into people’s decision making when investing in hybrid securities rather than in bonds and shares. In the experiment QuBE found participants who were subject to an ‘illusion of control’ or ‘overconfidence’ bias relatively increased their hybrid allocation in a mock portfolio. This research complements ASIC’s work on understanding how hybrids are sold to investors and increasing investor education about hybrid risk. The findings are also consistent with earlier research showing a desire for control is a strong driver among SMSF investors when deciding to set up and manage their own super fund. About two-thirds of Australian hybrid investors are SMSF investors.

Report 428 Improving communication with directors of firms in liquidation (REP 428) suggests even small alterations to communication, such as the order of messages in a letter to directors of companies in liquidation, can increase compliance. The report highlights there are likely to be two types of directors who fail to comply: those wishing to comply but who are overwhelmed and those intentionally non-compliant. It identifies opportunities to increase compliance through targeted ‘nudges’ and help for those wishing to comply.

Stata 14 released

From the Stata blog

"Here’s a partial list of what’s new, a.k.a. the highlights:

• Unicode
• More than 2 billion observations (Stata/MP)
• Bayesian analysis
• IRT (Item Response Theory)
• Panel-data survival models
• Treatment effects
  • Treatment effects for survival models
  • Endogenous treatments
  • Probability weights
  • Balance analysis
• Multilevel mixed-effects survival models
• Small-sample inference for multilevel models
• SEM (structural equation modeling)
  • Survival models
  • Satorra-Bentler scaled chi-squared test
  • Survey data
  • Multilevel weights
• Power and sample size
  • Survival models
  • Contingency (epidemiological) tables
• Markov-switching regression models
• Tests for structural breaks in time-series
• Fractional outcome regression models
• Hurdle models
• Censored Poisson regression
• Survey support & multilevel weights for multilevel models
• New random-number generators
• Estimated marginal means and marginal effects
  • Tables for multiple outcomes and levels
  • Integration over unobserved and latent variables
• ICD-10
• Stata in Spanish and in Japanese

The above list is not complete; it lists about 30% of what’s new.

For all the details about Stata 14, including purchase and update information, and links to distributors outside of the US, visit stata.com/stata14.

If you are outside of the US, you can order from your authorized Stata distributor. They will supply codes so that you can access and download from stata.com.

MARKETING ENDS."

Links 5th April 2015

1. Lukasz Walasek and Gordon Brown Psych Science article  "Income Inequality and Status Seeking"

2. Postdoctoral fellowship in behavioural economics working at ESRI Dublin. Application forms available at this link

3. Financial Solutions lab interesting initiative.

"The Financial Solutions Lab is a virtual laboratory for anyone who uses technology to improve Americans’ financial health. Lab participants share a relentless focus on building products and services that embrace inclusion, build trust, promote success, and create opportunity. Over the next five years, we will create challenges and rewards for innovative entrepreneurs, companies, and non-profits building solutions for the issue areas we highlight. We will grow an ecosystem of innovators that will catalyze impact on the lives of Americans."

4.  Two research fellowships at University of Stirling - across all areas of University

5. I am speaking at the Sydney Behavioural Economics Network on 15th April. Details here.

6. David Colander & Roland Kupers "Complexity & the Art of Public Policy:Solving Society’s Problems from the Bottom Up". Another from the mightily impressive Princeton University Press behavioural economics catalogue.

7. Call for papers for the first Stirling PhD Behavioural Science conference