Behavioral economics has two ‘souls’: Do they both depart from economic rationality?

In this paper, I argue that behavioral economics, far from being a monolithic theory, consists of two different ‘souls’ and that a fundamental asymmetry exists between them, with regard to the nature of the departures from the economics’ ‘canonical model’ they focus on. While a first class of departures deals with the major cognitive limitations and systematic biases in decision-making affecting economic behavior, a second research area investigates deviations from the classic assumption that economic agents are systematically driven by the pursuit of material self-interest. Even though on methodological grounds the two research areas share a broadly inductive approach – as they both aim at incorporating the major results obtained through several empirical methods (in particular, via experimental work) into formal economic analysis –, I claim that rather different methodological conclusions and regulatory and policy implications can be drawn, depending on the cognitive or social nature of the departures from the standard economic model under study.     

Psychology Implies Paternalism? Bounded Rationality may Reduce the Rationale to Regulate Risk-Taking

Behavioral economists increasingly argue that violations of rationality axioms provide a new rationale for paternalism – to “de-bias” individuals who exhibit errors, biases and other allegedly pathological psychological regularities associated with Tversky and Kahneman’s (in Science 185:1124–1131, 1974) heuristics-and-biases program. The argument is flawed, however, in neglecting to distinguish aggregate from individual rationality. The aggregate consequences of departures from normative decision-making axioms may be Pareto-inferior or superior. Without a well-specified theory of aggregation, individual-level biases do not necessarily imply losses in efficiency. This paper considers the problem of using a social-welfare function to decide whether to regulate risk-taking behavior in a population whose individual-level behavior may or may not be consistent with expected utility maximization. According to the social-welfare objective, unregulated aggregate risk distributions resulting from non-maximizing behavior are often more acceptable (i.e., lead to a weaker rationale for paternalism) than population distributions generated by behavior that conforms to the standard axioms. Thus, psychological theories that depart from axiomatic decision-making norms do not necessarily strengthen the case for paternalism, and conformity with such norms is generally not an appropriate policy-making objective in itself.     

Reciprocity and uncertainty: When do people forgive?

A sizable proportion of individuals act reciprocally. They punish and reward depending on the (un)kindness of those with whom they interact. In this paper, I explore whether individuals still reciprocate intentions when others lack full control over the consequences of their actions. By means of a dictator game with punishment opportunities, I show that unkind intentions are enough to trigger punishments, irrespectively of the outcome. By contrast, accidents are forgiven. To isolate how uncertainty over the result of an action affects the assessment of intentions, I control for other possible departures from self-profit maximization, such as distributional concerns or efficiency maximization. I find that the former also plays a role in respondents’ behavior.     

Bridge employment and job stopping: evidence from the Harris/Commonwealth Fund Survey

This article analyzes a 1989 Louis Harris and Associates survey designed to elicit information on the employment histories and job-stopping behavior of men and women who then were approaching or had recently reached retirement age. The results indicate that retirement often occurs gradually and includes a substantial period of "bridge employment." Most bridge jobholders work full-time, by choice, and report high levels of job enjoyment. Occupational mobility occurring late in life typically involves upward movement, although the pattern of change is quite different when it takes place outside, rather than within, the longest job. The principal concern identified in this article is the limited ability of some groups of workers (nonwhites, females, the less educated, and those in poorly compensated occupations) to either retain longest jobs or to obtain acceptable bridge employment. Health problems also frequently lead to early departures from the labor force.     

Exploring the co-movements between COVID-19 pandemic and international air traffic: A global perspective based on wavelet analysis

The travel and tourism industry was one of the fastest-growing industries before the onset of the COVID-19 pandemic. However, to avoid COVID-19 spread, the government authorities imposed strict lockdown and international border restrictions except for some emergency international flights that badly hit the travel and tourism industry. The study explores the nexus between international air departures and the COVID-19 pandemic in this strain. We use a novel wavelet coherence approach to dissect the lead and lag relationships between international flight departures and COVID-19 deaths from January 2020 to September 2020 (COVID-19 first wave period). The results reveal that international flights cause the spread of COVID-19 spread during May 2020 to June 2020 worldwide. The overall findings suggest asymmetries between daily international flight departures and COVID-19 deaths globally at different time-frequency periods due to uncertainty surrounding the COVID-19 pandemic. The study will be conducive for the policymakers to control the upsurge of COVID-19 spread worldwide.     

Protecting the Welfare of Children and its Causal Effect on Limiting Mother's Labour Migration

In June 2013 Sri Lanka introduced a new policy, the Family Background Report (FBR), to restrict mothers migrating for domestic work. This article performs an impact evaluation of the FBR using monthly departure statistics of female migrant workers from January 2012 to December 2014 in a difference‐in‐difference methodology. The identification is based on the inter‐temporal variation between the treatment and control groups. As anticipated, the FBR has a negative causal effect on female departures for foreign employment in the range of 449–812 departures per month. The findings are robust to placebo and sensitivity tests. Although successful in restricting females migrating for domestic work, this policy promotes migration outside the institutional framework of Sri Lanka and thereby increases their vulnerability at destination. For the policy initiative to be effective, its myopic focus has to be transformed into a long‐term plan to support those deterred from migrating.     

Empirically based conversion factors for calculating couple-years of protection

Couple-years of protection (CYP) is one of several commonly used indicators to assess international family planning efforts. It has been the subject of much debate, relating in part to the specific conversion factors used to translate the quantity of the respective contraceptive methods distributed to a single measure of protection. This article outlines a comprehensive effort to revisit those conversion factors based on the best available empirical evidence. In most instances, the analysis supports previously established standard conversion factors. However, there are two notable departures. Fewer condoms and spermicides are recommended for each CYP (120 vs. 150), primarily because coital frequency among condom users is lower than previously assumed. Furthermore, for sterilization, the authors recommend the use of country or region-specific conversion factors. Every program evaluation indicator has strengths and weaknesses, and the best program evaluation efforts use a variety of indicators. If CYP is used to evaluate programs, however, the authors believe that the conversion factors presented reflect the best available evidence.     

MEAD AND THE ART OF TRASH TALKING: I GOT YOUR GESTURE RIGHT HERE

ABSTRACT

Trash talking has rarely been studied within sociology at a time when the behavior itself has been flourishing in amateur and professional sports. George Herbert Mead's ideas on gestures, symbols, and language, in conjunction with the overarching transcendency of the community aid in understanding the development of self and the subsequent behaviors that emanate from and within trash talking in college athletics. Here a Meadian perspective is used to explain the act of trash talking at both macro- and micro-levels. Three areas were identified where Meadian philosophy applies: (1) the game and the role of the generalized other; (2) play and significant communication; and (3) self-development.     

THEORIES OF COMMITMENT, ALTRUISM AND RECIPROCITY: EVIDENCE FROM LINEAR PUBLIC GOODS GAMES

Theories of commitment, altruism, and reciprocity have been invoked to explain and describe behavior in public goods and social dilemma situations. Commitment has been used to explain behaviors like water conservation and voting. Altruism has been applied to explain contributions to charities and intergenerational transfers and bequests. Reciprocity has been invoked to explain gift exchange and labor market decisions. This paper describes a set of experiments, which distinguish between these competing theories by testing their comparative statics predictions in a linear public goods setting. Results provide strong support for reciprocity theories over either theories of commitment or of altruism. ( JEL C9, D64, H41, C72)     

EVOLUTION AND SPONTANEOUS UNIFORMITY: EVIDENCE FROM THE EVOLUTION OF THE LIMITED LIABILITY COMPANY

We examine whether the unguided state-by-state evolution of limited liability company statutes has led to efficient interstate uniformity. Our evidence suggests significant uniformity has been produced in cases where the net benefits of uniformity are positive, and that such uniformity has not been produced by herd behavior. Our results are consistent with Alchian's intuition about the role of market processes, and suggests that the survival of efficient rules, fostered by the rational behavior of decentralized economic actors, are produced by forces beyond the control or foresight of individual lawmakers or legislatures.     

Theory of mind,perceived intentions and reciprocal behaviour: Evidence from individuals with Autism Spectrum Disorder

Evidence suggests that departures from pure self-interest are due, at least partly, to individuals conditioning their behaviour on the perceived intentions of others. We present a new experiment that refines the study of intention-based other-regarding motives. Using a series of mini-ultimatum games that have been extensively studied in the literature, we compare the behaviour of normally-developing (ND) children to that of children with Autism Spectrum Disorder (ASD), who typically lack the ability to attribute intentions to the observed actions of others. We find that ND children’s rejection behaviour responds systematically to changes in the set of available options, in line with previous findings. ASD children’s rejections are virtually unaffected by the intentions that could be inferred from the games’ strategy space. These differences are mainly driven by ASD children with low mentalising abilities.     

THE REPRODUCTION OF FAMILIES: THE SOCIAL ROLE OF FAMILY THERAPY?

Family therapy, while highlighting the significance of family functioning for individual experience and behavior, has in general failed to respond to the critical analyses of the family that have recently been developed, and particularly that offered by the women's movement. Consequently, it cannot investigate the possibility that "dysfunction" in families is actually socially created and maintained. Family therapy's failure to consider the broader contexts of family functioning, a failure that is facilitated by the use of systems theory as its major theoretical underpinning, results in an uncritical acceptance of the contemporary family form.     

RACE AND IMPRISONMENT DECISIONS

The possible race differences in judicial sentencing have been of long-standing interest to social scientists. We argue, however, that prior research on the issue either uses crude measures of offense severity and prior record, or, if more precise measures are employed, is limited to one or a few offenses. The Pennsylvania guidelines sentencing data used in this report allow a more rigorous test of the racial hypothesis since they include detailed information on these two most important legal variables, on other variables for statistical controls, and on a fairly comprehensive list of common law offenses, with an adequate sample size. The data—analyzed with both additive and interaction models—reveal that race (net of other factors) has a small effect on judicial decision-making as it pertains to the likelihood of incarceration but has negligible effect on the length of imprisonment decision. The small race effect at the in/out decision is accounted for by dispositional departures in sentencing that favor white defendants. Offense severity is overwhelmingly the major factor influencing judicial sentencing, followed at some distance by prior record. At the end of the report, we discuss the implications of our findings for research on sentencing and for policies aimed at reducing the high incarceration rate of black males.     

POLITICAL MODELS OF THE BUSINESS CYCLE SHOULD BE REVIVED

Political models of the business cycle have typically been ignored because they appear inconsistent with rational behavior and because empirical evidence is inconclusive. This paper addresses the second issue, demonstrating for U.S. real GNP, unemployment, and inflation that electoral cycles (persistent patterns across electoral terms) are significant, but apparently only for Republican incumbents, and that partisan cycles (persistent differences between parties) are also significant. These findings are consistent with the conjecture that a minority party is more constrained by electoral concerns, whereas a majority party is freer to pursue partisan objectives.     

THE EFFECTIVENESS OF THE MINNESOTA COUPLE COMMUNICATION PROGRAM: A REVIEW OF RESEARCH*

Findings from a review of 19 research studies on the Minnesota Couple Communication Program (CCP) indicate that CCP has an immediate positive effect on communication behavior and relationship satisfaction. CCP does not alter reported levels of self-disclosure or self-esteem. Positive changes due to CCP persisted at follow-up in some studies, but evidence of the durability of effects is weak. While research on CCP has improved over the last ten years, future research is needed on the issues of maintenance of effects, the types of individuals and couples with whom CCP is most effective, and the specific program components which are most crucial for improving marital communication skills.     

SURVEY EVIDENCE ON EXCESSIVE PUBLIC PESSIMISM ABOUT THE FUTURE BEHAVIOR OF UNEMPLOYMENT

Two of the questions in the Surveys of Consumer Attitudes undertakenby the Survey Research Center of the University of Michigandeal with households' expectations about inflation and the changein unemployment. We compare quarterly time series of the meanresponses with the actual behavior of inflation and unemploymentto see whether households are overly optimistic or pessimisticabout the future behavior of inflation and unemployment. Wefind an asymmetry. Over the 21 years of our analysis, on averagethe public is neither overly optimistic nor overly pessimisticabout future inflation. However, the public has been significantlytoo pessimistic about the future behavior of unemployment. Theseresults have an important implication for macroeconomic policy.If politicians respond to complaints from the public about inflationand unemployment they will target policy instruments at unemploymentto a greater extent than if the public was not so pessimisticabout the behavior of unemployment. The result may be a higherrate of inflation than if the public were not mistakenly pessimisticabout the behavior of unemployment.     

Hypersexual Behavior and HIV Sex Risk among Young Gay and Bisexual Men

Hypersexual behavior has been identified as a sexual risk correlate among gay and bisexual men (GBM). The Hypersexual Behavior Inventory (HBI) has been shown to be a reliable and valid measure of hypersexual behavior in clinical populations, yet it has not been used to assess hypersexual behavior in nonclinical samples. We examined the psychometric properties of the HBI with survey data recorded between December 2009 and March 2010 in a sample of young men (N = 366, M = 21.46 years old, SD = 1.95) who self-identified as gay (89%) or bisexual (11%) and assessed its association with unprotected receptive anal intercourse (URAI) partners and occasions. Using cross-sectional data of single, sexually active young GBM (YGBM), we used confirmatory factor analyses to test the HBI's three-factor structure. Using negative binomial regressions, we then tested the association between the HBI subscales and sexual risk. After accounting for covariates, we found that sexual control was a risk factor for URAI partners and occasions, and coping was found to be a protective factor for URAI occasions. In light of our findings, we discuss the importance of reexamining the theoretical assumptions of hypersexual behavior and propose HIV prevention strategies that may reduce young GBM's vulnerability to HIV infection.     

TOWARD A SOCIOLOGY OF SPACE: THE CONSTRAINED CHOICE MODEL*

Traditional ecology has been criticized because of its failure to link ecological factors to microscopic social variables. That criticism has led to increasing interest in, but only limited theoretical development toward, an egocentric approach. The paper attempts to develop a rudimentary theory of micro ecology. It presumes that two elemental macro ecological variables, density and segregation, have significance for human interaction. These elemental factors set the probability for choice behavior in the city. To demonstrate this point a set of logically interrelated propositions is contructed. This theoretical structure is then used to develop a taxonomy of social areas that summarize the distinctive differences in the urban experience of sub area residents of the city.     

A TEST OF COMPETING EXPLANATIONS OF COMPENSATION DEMANDED

We find that prospect theory behavior is significantly more prevalent than utility theory behavior in experiments involving multiple, real items. In the experiments, subjects were endowed with three items and asked the minimum payments they required to be willing to return one, two, or three of them. Our key observation is that prospect theory implies concavity of compensation demanded, whereas utility theory implies convexity. We examine whether the compensation demanded is convex or concave in the number of items returned. ( JEL C91)     

Exploring the links between intertemporal fluctuations in export earnings and infant mortality: The case of the Sudan

The sociological studies of Third World quality of life have shared a tendency to assume that variations in the determinant variables follow smooth paths over time. However, an elaborate literature indicates that part of the explanation of variation in macro‐sociodemographic dependent variables (including quality of life indicators) may lie in erratic departures from trends in some macroeconomic determinants. This article represents an attempt to explore the nature of the effect of excessive fluctuations in export earnings and income on infant mortality rate using a single‐country time series data. The OLS model estimation findings indicate that instability in income has a systematic and significant adverse effect on infant mortality, whereas instability in export earnings exhibits a consistent lack of significance. These results indicate that the explanation of declines in development or quality of life indicators may also lie in aspects of development that are somehow overlooked in recent sociological studies of the Third World.