Some recent working papers at Geary Institute

Our paper on neural correlates of domain specific discounting is currently a working paper. Comments welcome. We are currently examining a number of extensions including gains versus losses, hypothetical versus real scenarios, small versus large amounts and others.

http://www.ucd.ie/economics/research/papers/2008/WP08.10.pdf

Kevin Denny has put up a working paper on handedness and depression. This adds to a number of recent papers on handedness (e.g. http://ftp.iza.org/dp2752.pdf and Denny and O'Sullivan 2007 JHR). It would be good to see this recent work synthesised in to a review as to what the sum total of findings implies for economics and whether these results are ultimately important for accounts of how brain structure and function influences economic behaviour. On the one hand.....

http://www.ucd.ie/economics/research/papers/2008/Wp08.14.pdf

Creative Capital

The personality of corporate brands, such as the creativity of Apple or the honesty of Disney, is so psychologically powerful that the mere sight of their logos, even subliminally flashed on a screen, is enough to make people behave more creatively or honestly, according to new social pyschology research, mentioned in the Financial Post.

I noticed recently that some of Geary's principal investigators have switched over to Apple Mac laptops. They may be trying to get more leverage out of Geary's stock of creative capital... This conference programme from 2005 has lots of useful links for reading about the concept of creative capital.

An interesting paper about the implications of outlier values for PCA

Construction of composite indices in presence of outliers

Date:2008-05-26

By: Mishra, SK

---Abridged Abstract---

Effects of outliers on mean, standard deviation and Pearson’s correlation coefficient are well known. The Principal Components analysis uses Pearson’s product moment correlation coefficients to construct composite indices from indicator variables and hence may be very sensitive to effects of outliers in data. Median, mean deviation and Bradley’s coefficient of absolute correlation are less susceptible to effects of outliers. This paper proposes a method to obtain composite indices by maximization of the sum of absolute Bradley’s correlation coefficients between the indicator variable and the derived composite index.

Basic Instinct

Pete Lunn from the ESRI has recently launched an overview of behavioural economics entitled "Basic Instincts: Human Nature and the New Economics".

http://www.amazon.co.uk/Basic-Instincts-Human-Nature-Economics/dp/0462099202

It is divided in to ten chapters which i give a very short summary of below. The blog isnt the place for a full review but i enjoyed reading it and would certainly recommend the type of people who read this blog put this on their summer reading list. Worth looking at the "people who read this have also read" section on Amazon also. I ordered a few more books while i was looking at this.

1. Believe it when you see it: This is a semi-autobiographical motivation of the book

2. Marketopia versus Muddleton: This overviews two contrasting views of how people behave

3. We have been misled: MISLED is an acronym for Luck, Mistakes, Surprises, Dishonesty, Events and Information all of which, along with rationality, can influence outcomes in bargains

4. What you dont know can hurt you: This overviews a number of rationality deviations

5. Establishing the motive: This examines trust, selfishness and a number of other emotions associated with various real-world games

6. The Elephant on the Corner Billboard: Examines advertising

7 .When in company: Examines organisational behaviour and incentives

8. Business is big...very big: Examines market structure

9. Governing principles: Behavioural macroeconomics

10. Corners and turning points: Behavioural Economics as Scientific Revolution

Further Reading: Useful references to the literature

Aerosmith and Time Preferences

I came across the following quote attributed to Aerosmith's Steven Tyler - a nice round up of low future orientation

"The things that come to those who wait may be the things left by those that got there first."

NBER Paper on Unexpected Income Shocks and Social Effects

From the NBER Website


The Own and Social Effects of an Unexpected Income Shock: Evidence from the Dutch Postcode Lottery

Peter J. Kuhn, Peter Kooreman, Adriaan R. Soetevent, Arie Kapteyn
NBER Working Paper No. 14035Issued in May 2008NBER Program(s): LS PE
---- Abstract -----
In the Dutch Postcode Lottery a postal code (19 households on average) is randomly selected weekly, and prizes – consisting of cash and a new BMW – are awarded to lottery participants living in that postal code. On average, this generates a temporary, unexpected income shock equal to about eight months of income for about one third of the households in a typical winning code, while leaving the incomes of nonwinning, neighboring households unaffected. We study the responses of consumption and reported happiness of both winners and nonwinners to these shocks. Consistent with simple models of in-kind transfers, the overwhelming majority of households who won a BMW convert it into cash. With the exception of food away from home, the only 'own' effects of cash winnings we detect are on durables expenditures and car consumption; these results support a version of the permanent income hypothesis in which durable spending is used to smooth consumption. We detect social effects of neighbors' winnings on two types of consumption: cars and exterior home renovations. Six months after the fact, winning the lottery does not make households happier, nor do neighbors' winnings reduce happiness.
This paper is available as PDF (811 K) or via email.
Machine-readable bibliographic record - MARC, RIS, BibTeX