Thursday, January 31, 2013

Class Composition and Career Choice

Massimo Anelli and Giovanni Peri have a paper on "The Long Run Effects of High-School Class Gender Composition"

The abstract reads:
"The long run earnings and career potential of individuals are strongly affected by their education. Among college educated individuals, the choice of college major is a very important determinant of labor market outcomes. In most countries men and women exhibit significant differences in this choice which is responsible for a large portion of the gender gap in earnings. In this paper we analyze whether the gender composition of peers (classmates) in high school affects the choice of major and hence long run earning potential. We use a newly collected and unique dataset covering 30,000 Italian students graduated from high school between 1985 and 2005. We exploit the fact that students are assigned to classes whose gender composition, within a school over time, varies exogenously. Moreover we are able to control for family, cohort, teacher and school effects in assessing the effect of peer-gender ratio on outcomes. We find that the gender ratio of peers in high school significantly affected the choice of major. A larger share of same-sex peers increases the probability of choosing majors associated to high earning jobs (Economics/Business, Medicine, Engineering). For women we also find that a large percentage of female high school classmates increases their long run performance in college and their earnings."

They say that "There are three reasons why we choose Italian high school students as ideal subjects to study the e ffect of peer gender on the choice of college major. First, in Italian high schools students are assigned to a class (usually made of 20 to 30 peers) when they enroll in high school and, except for small rates of attrition, they share with them the same teachers and in a pre-determined academic curriculum for 5 years (from 13 to 18 years old). These peers, therefore, interact with each other intensely during fi ve years of their school life, a period in which their personal and gender identity are fundamentally shaped."

"the class gender ratio was uncorrelated to any of the predetermined and observable characteristics of the students and of the class. This is the ideal context to separate school, cohort and teacher eff ects from e ffects of the class gender-ratio [..]. we now own data on 30,000 college preparatory high school students in the city of Milan (Italy) who graduated between 1985 and 2005. Those data include information on their school, cohort, class, identity of their peers, year of graduation, residence address when in high school, exit-test scores. Moreover we have merged this information with that on their college career (choice of major, graduation date, university attended) on labor market outcomes (earnings in year 2005, occupational choice) and on their family background."

Their main findings are

"First, we fi nd that, controlling for academic quality and family background, being assigned to a high school class with a larger share of people of the same gender increases the probability of choosing high earning college majors. This fi nding is true for both men and women. In particular women in high school classes with very high percentage of women have a 5-6% higher probability to choose high-earning majors than women in classes with high percentage of men. Similarly men in classes with high percentages of men have a 6-7% higher probability of choosing high earning majors. Second, those women who attended classes with large percentage of women and then choose high earning majors performed better than or as well as other women in those majors in terms of dropout rates and time to graduation. Hence the long run eff ect of attending high school classes with high percentage of women is, for a woman, a higher probability of enrolling and graduating from high earning majors and therefore higher expected wage. On the other hand men who attended high school classes with high percentage of men had higher probability of enrolling in high-earning majors but the final probability of graduating from high earning major was not diff erent from that of other men due to higher attrition. Finally, women who attended high school classes with high percentage of women and then enrolled in high earning majors had higher wages on the labor market relative to other women above and beyond (i.e. even controlling for) the e ffect driven by the major."

How do they rationalize their findings:

"These fi ndings can be rationalized with a simple human capital model in which the choice of major is  a ffected by its costs and benefi ts. If the individual cost of attending a high earning major depends on abilities (negatively) and on the self-confi dence of a person (positively), the low enrollment of women in those majors may be due to a low degree of self-confi dence. The share of women in the same high school class may increase the self-con fidence of a woman, as also found in the experimental evidence presented in the behavioral economic literature (Gneezy, Niederle and Rustichini 2003, Niederle and Vesterlund 2007) and as hypothesized in the theoretical literature on gender identity introduced by Akerlof and Kranton (2000)."

For a paper on belief updating and gender differences in doing so, see also

Mobius, Markus M., Muriel Niederle, Paul Niehaus and Tanya Rosenblat, “Managing Self-Confidence: Theory and Experimental Evidence”, September 2012.

See my earlier post on gender differences and competitiveness for looking at psychological attributes that can account for gender differences in choices of areas of study. We find that competitiveness is correlated with such study choices. We do not find that overconfidence per se is correlated with choices, though feelings on absolute or relative mathematical ability are indeed very much correlated with study choices.

Wednesday, January 30, 2013

Applications of Time Inconsistency

My colleague Douglas Bernheim just has a new NBER working paper that came out: "Poverty and Self-Control" by B. Douglas Bernheim, Debraj Ray, Sevin Yeltekin.
The abstract reads:
"The absence of self-control is often viewed as an important correlate of persistent poverty. Using a standard intertemporal allocation problem with credit constraints faced by an individual with quasi- hyperbolic preferences, we argue that poverty damages the ability to exercise self-control. Our theory invokes George Ainslie’s notion of “personal rules,” interpreted as subgame-perfect equilibria of an intrapersonal game played by a time-inconsistent decision maker. Our main result pertains to situations in which the individual is neither so patient that accumulation is possible from every asset level, nor so impatient that decumulation is unavoidable from every asset level. Such cases always possess a threshold level of assets above which personal rules support unbounded accumulation, and a second threshold below which there is a “poverty trap”: no personal rule permits the individual to avoid depleting all liquid wealth. In short, poverty perpetuates itself by undermining the ability to exercise self-control. Thus even temporary policies designed to help the poor accumulate assets may be highly effective. We also explore the implications for saving with easier access to credit, the demand for commitment devices, the design of accounts to promote saving, and the variation of the marginal propensity to consume across classes of resource claims."

This reminds me of two more papers that show the impact of time inconsistent preferences coauthored by Leeat Yariv.

In "Government Policy with Time Inconsistent Voters"  Alberto Bisin, Alessandro Lizzeri, and Leeat Yariv look at:
"Behavioral economics presents a “paternalistic”rationale for government intervention. Current literature focuses on benevolent government. This paper introduces politicians who may indulge/exploit these behavioral biases. We present an analysis of the novel features that arise when the political process is populated by voters who may be time inconsistent, a’la Phelps and Polak (1968) and Laibson (1997). Time inconsistent voters exhibit demand for commitment. We show that electorally accountable politicians may choose policies that interfere with individuals’desire to commit, and that government may not be very effective in satisfying the demand for commitment."

The abstract "Collective Self-Control" by Alessandro Lizzeri and Leeat Yariv reads:
"Behavioral economics presents a “paternalistic” rationale for intervention by a benevolent government. This paper studies the desirability of various forms of collective action when government decisions are determined via the political process in response to votes by time inconsistent voters. We consider an economy where the only “distortion” is the agents’time inconsistency. We fi…rst examine a fully decentralized economy where agents can make private “investments”in a commitment technology. We show that the demand for commitment is non monotone with the degree of time inconsistency, with agents with intermediate intensity of present bias exhibiting the highest value of commitment. We then study several forms of collective action. If only commitment decisions are centralized, commitment investment is often more moderate than if all decisions are centralized. Welfare consequences of full centralization (of both commitment and consumption decisions) are ambiguous and depend on the distribution of time inconstistency in the population."

Tuesday, January 29, 2013

Monkeys and Fairness

This seems the perfect way to introduce fairness to undergrads

The original video I put up has been deleted from Youtube.  It is part of a longer TED talk from Frans de Waal, but this is by far the best part. You can watch it below, the best part starts around 12:30

Monday, January 28, 2013

Choices over Time

Ariel Rubinstein sent me an email with a new paper of his, that is related to a topic I blogged about earlier, and which I think is understudied. His paper "Response Time and Decision Making: A “Free” Experimental Study" has the abstract

Response time is used to interpret results in decision problems. A correlation is found between low response time and choices which are clearly a mistake. The lack of correlation between low response time and behavior which is inconsistent with some familiar theories is interpreted as evidence that such phenomena are not anomalies and cannot simply be labeled as mistakes. Furthermore, the behavior of slow versus fast responders is dramatically different in some problems. It is suggested that a typology of slow and fast responders may be more useful in some cases than standard typologies."

Personally, I think that making the connection between fast and slow responses in a style as championed by Marina Agranov, Andrew Caplin and Chloe Tergiman in "Naive Play and the Process of Choice in Guessing
Games" may be even more illuminating. There players play against a group of people ho already made their choice, and then have 3 min to make a choice themselves. The important feature is that within those three minutes players can adjust their choices, and eventually, one second is randomly chosen, and the choice made at that second is implemented. This also allows players to take more time, but does not free them to leave faster just because they decided faster. And it allows to observe how choices change as players think longer.

For more on that topic, see my former post: Fast and Behavioral versus Slow and Rational

If anyone has more information on that topic, or is running experiments on this, I'd be glad to hear of it.

Friday, January 25, 2013

A Family-Friendly Occupation

Claudia Goldin and Larry Katz have a new paper on "The Most Egalitarian of All Professions: Pharmacy and the Evolution of a Family-Friendly Occupation"

The abstract reads "Pharmacy has become a female-majority profession that is highly remunerated with a small gender earnings gap and low earnings dispersion relative to other occupations. We sketch a labor market framework based on the theory of equalizing differences to integrate and interpret our empirical findings on earnings, hours of work, and the part-time work wage penalty for pharmacists. Using extensive surveys of pharmacists for 2000, 2004, and 2009 as well as samples from the American Community Surveys and the Current Population Surveys, we explore the gender earnings gap, the penalty to part-time work, labor force persistence, and the demographics of pharmacists relative to other college graduates. We address why the substantial entrance of women into the profession was associated with an increase in their earnings relative to male pharmacists. We conclude that the changing nature of pharmacy employment with the growth of large national pharmacy chains and hospitals and the related decline of independent pharmacies played key roles in the creation of a more family-friendly, female-friendly pharmacy profession. The position of pharmacist is probably the most egalitarian of all U.S. professions today."

There is a nice write-up in the NBER digest here.

Thursday, January 24, 2013

Bargaining and Taxi-Cabs: three papers

There are three papers that have recently used taxicabs, or Autorickshaws, as it is, to study bargaining and discrimination in prices among various customers. Well, three I have been aware of, at least...

These are (in alphabetical order)

Loukas Balafoutas, Adrian Beck, Rudolf Kerschbamer  and Matthias Sutter in  "What Drives Taxi Drivers?
A Field Experiment on Fraud in a Market for Credence Goods". The abstract reads
"Credence goods are characterized by informational asymmetries between sellers and consumers that invite fraudulent behavior by sellers. This paper presents a natural field experiment on taxi rides in Athens, Greece, set up to measure different types of fraud and to examine the influence of passengers’ presumed information and income on the extent of fraud. We find that passengers with inferior information about optimal routes are taken on detours of almost double length, while lack of information on the local tariff system increases the likelihood of manipulated bills by about fifteen percentage-points. Passengers’ income seems to have no effect on fraud."

Marco Castillo, Ragan Petrie, Maximo Torero & Lise Vesterlund have a paper on "Gender Differences in Bargaining Outcomes: A Field Experiment on Discrimination" that has been around for a long time, but now is forthcoming in the Journal of Public Economics.
I blogged about it before, but, here is abstract, once more:
"We examine gender differences in bargaining outcomes in a highly competitive and commonly used market; the taxi market in Lima, Peru. We find that men face higher initial prices and rejection rates. To explain the inferior treatment of men we conduct an experiment where passengers send a signal on valuation before negotiating. The signal eliminates gender differences and the response is shown only to be consistent with statistical discrimination. In separating the role of statistical and taste-­based discrimination within the market, we address the concern that discrimination may be implicit"


Daniel E. Keniston: “Bargaining and Welfare: A Dynamic Structural Analysis of the Autorickshaw Market”  where the abstract reads:
"Bargaining for retail goods is common in developing countries, but rare in the developed world. The welfare implications of this di fference are theoretically ambiguous if bargaining is a low cost form of price discrimination, it may lead to greater trade and welfare and even approximate the optimal incentive compatible outcome. However, if bargaining imposes large utility costs on the participants, then a fixed price may be preferable. I develop the tools to resolve this question, specifying a mechanism design problem adapted to the context of bargaining, and developing a dynamic structural estimation technique to infer the structural parameters of the market. I then apply these techniques to the market for local autorickshaw transportation in Jaipur, India, using data I collected over 2008-2009."

It seems such a specialized area, but apparently the authors don't know of each others work, only one paper cites the other two...

Wednesday, January 23, 2013


The Chronicle of higher education has a few articles on an interesting psychology measure, "grit", championed by Angela L. Duckworth.

In Traits of the 'Get It Done' Personality: Laser Focus, Resilience, and True Grit, Katherine Mangan cites Robert J. Sternberg, president of the American Psychological Association,
"Being passionate about your work and resilient in the face of setbacks are key, most experts agree. "You're going to go through periods where your articles get rejected, students are giving you bum ratings, and your grant applications are rejected," says Mr. Sternberg, who, after 35 years at Yale and Tufts, became provost and a professor of psychology at Oklahoma State University in 2010. "If you don't believe in yourself, it's easy to think that you're a loser and to stop trying," he says."

She then goes on

"Ms. Duckworth, a former middle-school math teacher, became interested in studying the traits, other than intelligence, that help some students succeed. She zeroed in on the dogged determination and focus shared by successful students, spelling-bee champions, and West Point cadets. Taking a page from a John Wayne movie, she called it "grit." "The gritty person approaches achievement as a marathon," she writes in an article published in an online journal. "The gritty person sticks with it, whereas others might be distracted by boredom, failure, adversity, or plateaus." "

In a more recent article of the Chronicle "'Noncognitive' Measures: The Next Frontier in College Admissions: Admissions offices want to know about traits, like leadership, initiative, and grit, that the SAT doesn't test", grit comes up again:

"Over the last decade, a handful of colleges have designed "noncognitive" assessments to measure attributes—like leadership and the ability to meet goals—that content-based tests do not. Succeeding in college often requires initiative and persistence, or what some researchers call "grit." Noncognitive measures are an attempt to gauge such qualities. If the SAT asks what a student has learned, these assessments try to get at how she learned it."

For more on grit, see also the following from public radio

Here's a link to the grit test.

Stay tuned for a later post on some of the studies, still have to look at them in more detail... Comments from someone who knows something about that very welcome!

Tuesday, January 22, 2013

The New Science of Pleasure

Daniel McFadden just has a new NBER Working Paper with the amazing title: The New Science of Pleasure. The abstract reads

"The neoclassical view of consumers as relentless egoistic maximizers is challenged by evidence from cognitive psychology, anthropology, evolutionary biology, and neurology. This paper begins by surveying the development of neoclassical consumer theory and the measurement of welfare, and expansions to encompass preference fields, nonlinear budgets, hedonic goods and household production, and consumption dynamics. Following this, it reviews the newer evidence on consumer behavior, and what this implies for the measurement of consumer beliefs, intentions, preferences, choices, and well-being."

For an older, freely accessible version click here

Monday, January 21, 2013


There is a new short paper by Pedro Bordalo, Nicola Gennaioli and Andrei Shleifer on "Salience and Asset Prices "  The abstract reads:
"We present a simple model of asset pricing in which payoff salience drives investors' demand for risky assets. The key implication is that extreme payoffs receive disproportionate weight in the market valuation of assets. The model accounts for several puzzles in finance in an intuitive way, including preference for assets with a chance of very high payoffs, an aggregate equity premium, and countercyclical variation in stock market returns."

They have a series of papers on salience, see

Pedro Bordalo, Nicola Gennaioli and Andrei Shleifer "Salience Theory of Choice Under Risk" , Quarterly Journal of Economics, August, 2012.

and more recently

Pedro Bordalo, Nicola Gennaioli and Andrei Shleifer"Salience and Consumer Choice", May, 2012.

Sunday, January 20, 2013

Keyword Economics

One of my colleagues talked about a (not very inspired) way to do research, which he adequately describes as keyword research (and which he denounces whole heartily). The idea is the following, which seems to work very well for theory papers: Take a bunch of keywords, select a few, check if a paper has been written  if so, try again...

In that spirit, I came across the following blogpost: Sociology title Generator

Saturday, January 19, 2013

Social Insurance and the Marriage Market

I just saw Petra Persson present her JM paper "Social Insurance and the Marriage Market" at Stanford.
Her long abstract reads: "When social insurance eligibility depends on marital status, this is a government intervention into the marriage market. I formally show that such intervention influences three behavioral margins in the marriage market, and test the theory exploiting a Swedish reform of survivors insurance – an annuity paid to widows, but not divorcees, upon the husband’s death. First, I analyze bunching in the distribution of marriages and show that, by affecting the wedge between marriage and cohabitation, survivors insurance alters the composition of married couples up to 45 years before the annuity’s expected payout. This distortion is larger in couples with higher ex post male mortality, holding constant the policy’s value at realization and all demographics that I observe, suggesting “adverse selection” into government-provided insurance. Second, I use a regression discontinuity design to show that removal of survivors insurance from existing marriage contracts caused divorces and, in surviving unions, a renegotiation of marital surplus. Third, because survivors insurance subsidized couples with highly unequal earnings (capacities), its elimination raised the long-run assortativeness of matching. I argue that such marriage market responses to social insurance design have important implications for when it is optimal to separate social insurance from marriage in modern societies."

Apart from the obvious picture that shows the big spike in marriages just before the introduction of the policy change (a spike so large it is obvious it contains "additional" marriages that otherwise wouldn't have happened), I actually liked the effect of the policy on the kinds of people that marry.

She is one of a few people on the JM with "marriage" papers, see my former post on Gender, Education and Marriage

Friday, January 18, 2013

Dynamic Inconsistency and Group Decisions

My colleague Matt Jackson and my coauthor Leeat Yariv have two new papers on dynamic inconsistency and group decisions.

The theory paper is "Collective Dynamic Choice: The Necessity of Time Inconsistency" (unfortunately I found no direct link), the abstract reads:
"We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, every Pareto efficient and non-dictatorial method of aggregating utility functions must be time inconsistent. We also show that decisions made via non-dictatorial voting methods are intransitive."

They also have an experimental paper "Present Bias and Collective Dynamic Choice in the Lab"
"We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, utilitarian aggregation necessitates a present bias. In lab experiments three quarters of 'social planners' exhibited present biases, and less than two percent were time consistent. Roughly a third of subjects acted as if they were pure utilitarians, and the rest chose as if they also had varying degrees of distributional concerns."

Thursday, January 17, 2013

Gender Differences in Competitiveness and Career Choices

In the Fall I gave a lecture on "Gender Differences in Competitiveness" at the Decision Making and Emotion Regulation in Life-Span Transitions Conference organized by The Behavior Change Research Network in Berkeley.

Below you find a video of my talk, my lecture covers the first 55 or so minutes. 

The talk is mostly based on
Niederle, Muriel, and Lise Vesterlund, “Do Women Shy away from Competition? Do Men Compete too Much?,” Quarterly Journal of Economics, August 2007, Vol. 122, No. 3: 1067-1101.


 Buser, Thomas, Muriel Niederle and Hessel Oosterbeek, “Gender, Competitiveness and Career Choices,” November, 2012,online appendix.

I also mention

Gneezy, Uri, Muriel Niederle, Aldo Rustichini, “Performance in Competitive Environments: Gender Differences”, Quarterly Journal of Economics, CXVIII, August 2003, 1049 – 1074.

Niederle, Muriel and Lise Vesterlund, “Gender and Competition”, Annual Review in Economics, 2011, 3, 601–30.

Wednesday, January 16, 2013

Hyperbolic Discounting and Consumption Goods

Time Inconsistency and Hyperbolic Discounting has made important inroads in Economics and seems one of the big areas of behavioral economics with large policy implications.

Ned Augenblick, Charles Sprenger and I just finished a new paper, “Working Over Time: Dynamic Inconsistency in Real Effort Tasks”. The abstract reads:
"Experimental tests of dynamically inconsistent time preferences have largely relied on choices over time-dated monetary rewards. Several recent studies have failed to find the standard patterns of time inconsistency. However, such monetary studies contain oftendiscussed confounds. In this paper, we sidestep these confounds and investigate choices over consumption (real effort) in a longitudinal experiment. We pair those effort choices with a companion monetary discounting study. We confirm very limited time inconsistency in monetary choices. However, subjects show considerably more present bias in effort. Furthermore, present bias in the allocation of work has predictive power for demand of a meaningfully binding commitment device. Therefore our findings validate a key implication of models of dynamic inconsistency, with corresponding policy implications."

A much longer title we however never seriously considered was: Working over time, but not taking care of business...

Monday, January 14, 2013

Fairness and Apes

There is a new paper on Chimpanzees and the ultimatum game by Darby Proctor, Rebecca A. Williamson, Frans B. M. de Waal, and Sarah F. Brosnan, "Chimpanzees play the ultimatum game." PNAS, January 14, 2013 DOI: 10.1073

the abstract reads:
"Is the sense of fairness uniquely human? Human reactions to reward division are often studied by means of the ultimatum game, in which both partners need to agree on a distribution for both to receive rewards. Humans typically offer generous portions of the reward to their partner, a tendency our close primate
relatives have thus far failed to show in experiments. Here we tested chimpanzees (Pan troglodytes) and human children on a modified ultimatum game. One individual chose between two tokens that, with their partner’s cooperation, could be exchanged for rewards. One token offered equal rewards to both players,
whereas the other token favored the chooser. Both apes and children responded like humans typically do. If their partner’s cooperation was required, they split the rewards equally. However, with passive partners—a situation akin to the so-called dictator game—they preferred the selfish option. Thus, humans and chimpanzees show similar preferences regarding reward division, suggesting a long evolutionary history to the human sense of fairness."

A summary can be found at Science news: "Chimpanzees Successfully Play the Ultimatum Game: Apes' Sense of Fairness Confirmed"

Correlates of Competitiveness and Gender Differences

I recently came across the following paper by Ingvild Almas, Alexander W. Cappelen, Kjell G. Salvanes,
Erik Ø. Sørensen and Bertil Tungodden "Willingness to Compete: Family Matters"

The abstract reads:

"This paper studies the results from a lab experiment with a representative sample of adolescents in Norway, where we link behavioral data from the experiment to official register data about family background. We show that family background is fundamental in two important ways. First, children from families where parents have low income and education are less willing to compete, even when controlling for confidence, performance, risk- and time preferences, social preferences, and psychological traits. Second, family background is crucial for understanding the observed large gender difference in willingness to compete. Girls from well-off families are much less willing to compete than boys, whereas we do not find any gender difference among children with low socioeconomic background."

I long suspected that differences in gender differences in competitiveness may be particularly stark among the "upper tail". It would be nice to know to what extent such differences are driven by an increase in competitiveness by males.

There is still a lot to be understood about the determinants of gender differences in competitiveness  and competitiveness in general and correlations with other variables. This seems even more important now that we have seen that competitiveness may predict education choices, which, of course, in turn can affect economic outcomes, see my former blogpost: Competitiveness and Career Choices

Friday, January 11, 2013

Workshop on Theoretical and Experimental Macroeconomics and Experimental Macroeconomics Summer School

Call For Papers
The Fourth International Workshop on Theoretical and Experimental Macroeconomics will be held as part of the Barcelona Graduate School of Economics (GSE) Summer Forum on June 11-12, 2013 at Universitat Pompeu Fabra in Barcelona, Spain.

The keynote speakers are:

Michael Woodford (Columbia University)
Aldo Rustichini (University of Minnesota, Federal Reserve Bank of Minneapolis)
Researchers are invited to submit papers that employ behavioral, experimental, or complementary theoretical approaches to macroeconomic topics.  The deadline for submissions is: February 15, 2013.
Instructions for paper submission and other details can be found on the workshop website:

Authors chosen to present papers will be notified by February 28, 2013. A preliminary program will be announced on March 14, 2013.  The Barcelona GSE will be able to cover travel and accommodation expenses for speakers, with some limits agreed upon in advance.

Experimental Macroeconomics Summer School
We also wish to announce the sixth Barcelona LeeX Experimental Economics Summer School in Macroeconomics to be held immediately following the GSE workshop on June 13-18, 2012 and also held at Universitat Pompeu Fabra. Graduate students and junior faculty with specializations or research interests in macroeconomics are especially encouraged to apply to this summer school which is intended to introduce students to experimental methods for studying macroeconomic problems.  Summer school students are also invited to attend the Workshop on Theoretical and Experimental Macroeconomics that precedes the summer school.

Details about the summer school and application information are available at:

Workshop and Summer School Organizers
John Duffy University of Pittsburgh
Frank Heinemann, Technical University of Berlin
Rosemarie Nagel, Universitat Pompeu Fabra, ICREA, and Barcelona GSE
Shyam Sunder, Yale University
Please forward this announcement to any interested parties.

Thursday, January 10, 2013

More Nobel Photos

Here's another picture of Stanford economists (and the Nobel Laureate) getting ready for the Nobel Ceremony and Banquet:

In case you don't recognize the economists, here's a close up:

For my friends: Yes, that's me in the middle...

Here's a picture of the NRMP crew that got invited to the Nobel Ceremony, with  Elliott Peranson on the left and me on the right of Al Roth.

Tuesday, January 8, 2013

More on too many women

Reading the Bookslut blog, I saw the following:

There is a book award called the Costa Book award: The Times reports that "Women sweep the board at Costa Book Awards".  They write that "For the first time in its history, women have won all five award categories at the Costa Book Awards. [..] The 2012 Man Booker, Forward and Costas have now all gone to female writers."

The Telegraph has the headline: "Costa Book Awards: winning women fully deserve their prizes" (Isn't that a little funny for a headline..?)
and starts out with "It feels like a watershed moment sure to get people talking: for the first time in its history women have won all five Costa Book Awards. But look a little closer and the winners in each category are hardly controversial. [...] I should also mention that three of the five Costa winners have male protagonists – evidence, if we needed it, that the authors are pursuing the stories that interest them and do not feel in the slightest inhibited their gender. Neither should their readers." Not sure I would interpret necessarily the evidence of male protagonists the way the reporter does, however... 

I am sometimes disturbed when a female author writes from the point of view of a male protagonist (which is not the same as writing a book with a male protagonist) though I guess I shouldn't be, but somehow, it feels weird. It made me stop reading one of Herta Muellers' novels....

Monday, January 7, 2013

Gender Differences In Propensity to Do Favors

Here is a recent Slate blog about new research by Lise Vesterlund, joint with  Linda Babcock, Brenda Peyser, MJ Tocci, and Amanda Weirup. I have seen Lise present it at Stanford: It's very exciting, and I too eagerly await the paper!

I hope to be able to write another blogpost on this soon-isch

Cognitive Capacity and Decision Making

There are several new papers assessing the link between cognitive ability to decision making.

Sumit Agarwal and Bhashkar Mazumder have a paper that just came out in the recent issue of American Economic Journal: Applied Economics, 2013, 5(1): 193–207 on "Cognitive Abilities and Household Financial Decision Making". The abstract reads:
"We analyze the effects of cognitive abilities on two examples of consumer financial decisions where suboptimal behavior is well defined.  The first example features the optimal use of credit cards for convenience transactions after a balance transfer and the second involves  a financial mistake on a home equity loan application. We find that  consumers with higher overall test scores, and specifically those with  higher math scores, are substantially less likely to make a financial mistake. These mistakes are generally not associated with nonmath  test scores."

They use "all active duty military personnel in 1993 who entered the military beginning in September 1986 so that test scores are measured consistently. We use the Armed Forces Qualifying Test (AFQT) which combines two of the math scores with two of the verbal scores. In addition to test scores, we have data on sex, age, education, service branch, race, ethnicity, marital status, and zip code of residence."

They thereby circumvent a problem pointed out by Carmit Segal in  “Working When No One is Watching: Motivation, Test Scores, and Economic Success,” Management Science, 58(8), 2012, pp. 1438-1457.

Another recent paper that correlates cognitive ability with income is by Syngjoo Choi, Shachar Kariv, Wieland Müller, and Dan Silverman: "Who Is (More) Rational?"

Their abstract reads: "Revealed preference theory offers a criterion for decision-making quality: if decisions are high quality then there exists a utility function that the choices maximize. We conduct a large-scale field experiment that enables us to test for consistency with utility maximization. We find that high-income and high-education subjects display greater levels of consistency than low-income and low-education subjects, men are more consistent than women, and young subjects are more consistent than older subjects. We also find that consistency with utility maximization is strongly related to wealth: a standard deviation increase in standard consistency scores is associated with 15-19 percent more wealth."

Sunday, January 6, 2013

Too many Women

I have to admit, I had to laugh out loud while reading the beginning of this article: "A Remarkable Number of Women" By Female Science Professor

This reminds me of the year Susan Athey was Chair of the 2006 North American Winter Meeting, Boston, Massachusetts of the Econometric Society and formed the following Program Committee.

Saturday, January 5, 2013

The End of History

In the recent Science issue there is an article on "The End of History Illusion" by Jordi Quoidbach, Daniel T. Gilbert and Timothy D. Wilson. The abstract reads:
"We measured the personalities, values, and preferences of more than 19,000 people who ranged in age from 18 to 68 and asked them to report how much they had changed in the past decade and/or to predict how much they would change in the next decade. Young people, middle-aged people, and older people all believed they had changed a lot in the past but would change relatively little in the future. People, it seems, regard the present as a watershed moment at which they have finally become the person they will be for the rest of their lives. This “end of history illusion” had practical consequences, leading people to overpay for future opportunities to indulge their current preferences."

Turns out the NYtimes also found this paper interesting, see the column by John Tierney

This reminds me a little of the following:

Loewenstein, G., O'Donoghue, T. & Rabin, M. (2003). Projection bias in predicting future utility. Quarterly Journal of Economics, 118, 1209-1248.
That abstract reads:
"People exaggerate the degree to which their future tastes will resemble their current tastes. We present evidence from a variety of domains which demonstrates the prevalence of such projection bias, develop a formal model of it, and use this model to demonstrate its importance in economic environments. We show that, when people exhibit habit formation, projection bias leads people to consume too much early in life, and to decide, as time passes, to consume more—and save less—than originally planned. Projection bias can also lead to misguided purchases of durable goods. We discuss a number of additional applications and implications."

Both are reasons why we may have a hard time to make choices for our future, choices that we actually are happy about once that future occurs.

Stay tuned for more on time inconsistency...

Friday, January 4, 2013

Bonobos and Altruism

Here's an article that appeared in PLOS one by Jingzhi Tan and Brian Hare: "Bonobos Share with Strangers"

The abstract reads:
"Humans are thought to possess a unique proclivity to share with others – including strangers. This puzzling phenomenon has led many to suggest that sharing with strangers originates from human-unique language, social norms, warfare and/or cooperative breeding. However, bonobos, our closest living relative, are highly tolerant and, in the wild, are capable of having affiliative interactions with strangers. In four experiments, we therefore examined whether bonobos will voluntarily donate food to strangers. We show that bonobos will forego their own food for the benefit of interacting with a stranger. Their prosociality is in part driven by unselfish motivation, because bonobos will even help strangers acquire out-of-reach food when no desirable social interaction is possible. However, this prosociality has its limitations because bonobos will not donate food in their possession when a social interaction is not possible. These results indicate that other-regarding preferences toward strangers are not uniquely human. Moreover, language, social norms, warfare and cooperative breeding are unnecessary for the evolution of xenophilic sharing. Instead, we propose that prosociality toward strangers initially evolves due to selection for social tolerance, allowing the expansion of individual social networks. Human social norms and language may subsequently extend this ape-like social preference to the most costly contexts."

Thursday, January 3, 2013

Applying the Peak-End-Rule to Teaching

The chronicle of higher education has an advise section that proposes to apply a psychological concept, the peak-end rule, to how to teach classes (or maybe how to get good ratings), check out "Mind the 'Peak-End' Rule".

If you don't know the article by Kahneman, D., B. L. Fredrickson, C. A. Schreiber, and D. A. Redelmeier, “When More Pain Is Preferred to Less: Adding a Better End,” Psychological Science,
IV (1993), 401–05, check it out; see also Kahneman, Daniel, Peter P.Wakker and Rakesh Sarin, "Back to Bentham? Explorations of Experienced Utility", The Quarterly Journal of Economics, May 1997.

Wednesday, January 2, 2013

Affirmative Action and Diversity

Recently, there have been several articles and posts on affirmative action, see for example the NYtimes on Fears of an Asian Quota in the Ivy League.

There is also this special report on gender from the Chronicle of Higher Education