Learning from mistakes: What do inconsistent choices over risk tell us?

We implement a risk experiment that allows for judgment errors to investigate who makes mistakes and whether it matters. The experiments are conducted with a random sample of the adult population in Rwanda, and data on financial decisions are collected. We find a high proportion of inconsistent choices, with over 50% of the participants making at least one mistake. Importantly, errors are informative. While risk aversion alone does not explain financial decisions, risk aversion and inconsistent choices interact in significant and sensible ways. As we would expect, risk-averse individuals are more likely to belong to a savings group and less likely to take out an informal loan. For those more likely to make mistakes, however, as they become more risk averse, they are less likely to belong to a savings group and more likely to take up informal credit, suggesting that mistakes correlate with less than optimal behavior.

False positives or hidden dimensions: What can monetary and multidimensional measurement tell us about child poverty in Vietnam?

Roelen K, Gassmann F, de Neubourg C. False positives or hidden dimensions: what can monetary and multidimensional measurement tell us about child poverty in Vietnam? A widely used division between poverty measures based on conceptual underpinnings and analytical outcomes is that of monetary versus multidimensional measures. Comparisons of the use and outcomes of the two methods have shown that they predominantly provide different pictures of poverty in terms of size, rank and group. This article contributes to the long‐standing and ongoing debate on poverty measurement by comparing the use of monetary and multidimensional poverty approaches, with a special focus on children in Vietnam and extending the empirical analysis beyond conventional methods. In addition to investigating whether poverty outcomes or groups of identified poor children differ when using the two different poverty measures, we also investigated the drivers underlying these differences. Findings confirm a considerable degree of mismatch: both poverty measures proved to be inadequate proxies for the other and factors underlying the identification by either one or both of the measures differed.     

What price compromise?

This paper identifies, and tests experimentally, a prediction of the Nash bargaining axioms that may appear counterintuitive. The context is a simple bargaining problem in which two players have to agree a choice from three alternatives. One alternative favours one player and a second favours the other. The third is an apparently reasonable compromise, but is in fact precluded as an agreed choice by the Nash axioms. Experimental results show that agreement on this third alternative occurs rather often. Our subjects’ behaviour could be interpreted as the paying of an irrationally high price, according to the Nash axioms, in order to reach a compromise agreement.     

Heterogeneity in life-duration preferences: Are risky recreationists really more risk loving?

We conduct multiple price list experiments that elicit life duration risk preferences from amateur auto racers, technical rock climbers, SCUBA divers, and a student control group. We posit a preference function that allows for risk aversion and probability weighting. We are particularly interested in whether the behavior of risk takers, such as risky recreationists or smokers, is best explained by a risk-tolerant utility function or if immunity to possibility bias arising from overweighting of low probabilities is a more important motivator of the choice to engage in risky activities. We find that amateur auto racers are more rational than either students or other risky recreationists because they are less likely to overemphasize low-probability events. Women, older subjects, and rock climbers are more susceptible to possibility bias than others, making them likely to overinvest in disease treatments that have a low probability of success.     

Credibility and Inflation Expectations: What we can tell from seven emerging economies?

This study is a contribution to the literature concerning credibility and its effect on the distribution between forward-looking behavior and backward-looking behavior for formation of inflation expectations in the case of emerging economies. Based on data gathered from seven inflation targeting emerging economies (Brazil, Chile, Colombia, Mexico, Poland, South Africa, and Turkey), this paper analyzes how much the credibility associated with the inflation target contributes to anchoring expectations. The findings denote that although credibility is relevant to reduce inflation expectations, these countries present low monetary credibility and thus the backward-looking behavior is predominant for the formation of inflation expectations. Therefore, in order to improve the expectations channel of monetary policy in emerging economies, a policy of increasing transparency regarding inflation expectations is mandatory to the central banks’ task of anchoring inflation expectations.     

How to reveal people’s preferences: Comparing time consistency and predictive power of multiple price list risk elicitation methods

The question of how to measure and classify people’s risk preferences is of substantial importance in the field of economics. Inspired by the multitude of ways used to elicit risk preferences, we conduct a holistic investigation of the most prevalent method, the multiple price list (MPL) and its derivations. In our experiment, we find that revealed preferences differ under various versions of MPLs as well as yield unstable results within a 30-minute time frame. We determine the most stable elicitation method with the highest forecast accuracy by using multiple measures of within-method consistency and by using behavior in two economically relevant games as benchmarks. A derivation of the well-known method by Holt and Laury (American Economic Review 92(5):1644–1655, 2002), where the highest payoff is varied instead of probabilities, emerges as the best MPL method in both dimensions. As we pinpoint each MPL characteristic’s effect on the revealed preference and its consistency, our results have implications for preference elicitation procedures in general.     

Eliciting risk preferences: When is simple better?

We study the estimation of risk preferences with experimental data and focus on the trade-offs when choosing between two different elicitation methods that have different degrees of difficulty for subjects. We analyze how and when a simpler, but coarser, elicitation method may be preferred to the more complex, but finer, one. Results indicate that the more complex measure has overall superior predictive accuracy, but its downside is that subjects exhibit noisier behavior. Our main result is that subjects’ numerical skills can help better assess this tradeoff: the simpler task may be preferred for subjects who exhibit low numeracy, as it generates less noisy behavior but similar predictive accuracy. For subjects with higher numerical skills, the greater predictive accuracy of the more complex task more than outweighs the larger noise. We also explore preference heterogeneity and provide methodological suggestions for future work.     

The aggregation of preferences: can we ignore the past?

The article shows that a Paretian social welfare function can be history independent and time consistent only if a stringent set of conditions is verified. Individual utilities must be additive. The social welfare function must be a linear combination of these utilities. Social preferences are stationary only if, in addition, all individuals have the same constant discount rate. The results are implemented in two frameworks: deterministic dynamic choice and dynamic choice under uncertainty. The applications highlight that the conditions are unlikely to be met by individual preferences, and that they severely restrict social preferences.     

What Do We Know about the Family?

Over the years we have spoken and written a great deal about universal pedagogical education, about the search for new forms and methods for educators to work with families, and we have been drawing inferences from a variety of sometimes brilliant and interesting experience. But can we claim today that the school has accomplished much in the way of pedagogical enlightenment of parents, or exerting influence on the family? It would take a great deal of boldness to do so. What is wrong here? Isn't it a fact that, while attempting to influence the family, we fundamentally know nothing about it—except, perhaps, whether it is a "drinking" family or a sober one? Yet statistics make very clear that more and more offenses are being committed by adolescents who come from families that are considered well off. Hence, this well-being must be illusory, and it is essential that we study the family more comprehensively and in depth, that we figure out what is important to teach parents. Considerable help in this regard can be provided by special studies that are being carried out at the Institute of Sociological Research, USSR Academy of Sciences. In this article we acquaint readers with this research.     

Does exposure to unawareness affect risk preferences? A preliminary result

One fundamental assumption often made in the literature on unawareness is that risk preferences are invariant to changes of awareness. We study how exposure to unawareness affects choices under risk. Participants in our experiment choose repeatedly between varying sure outcomes and a lottery in three phases. All treatments are exactly identical in phase 1 and phase 3, but differ in phase 2. There are five different treatments pertaining to the lottery faced in phase 2: The control treatment (i.e., a standard lottery), the treatment with awareness of unawareness of lottery outcomes but known number of outcomes, the treatment with awareness of unawareness of outcomes but with unknown number of outcomes, the treatment with unawareness of unawareness of some outcomes, and the treatment with an ambiguous lottery. We study both whether behavior differs in phase 3 across treatments (between subjects effect) and whether differences of subjects’ behavior between phases 1 and phase 3 differ across treatments (within subject effects). We observe no significant treatment effects.     

What can agencies do to increase foster carer satisfaction?

Stable, long‐term foster care homes are critical to ensuring a safe and nurturing childhood for many children worldwide. Greater foster carer satisfaction is associated with increased carer retention and is therefore critical in securing such stable homes for children. The purpose of this study is to determine which factors associated with foster care agencies contribute to higher levels of foster carer satisfaction. Results from a longitudinal study of 137 foster carers indicate that perceived adequacy of agency support, preplacement training, money to cover placement expenses, and a good match between the carer and the child are predictive of higher foster carer satisfaction. A mediation model further points to the provision of preplacement training as key to ensuring higher levels of satisfaction. Results offer new insights into factors related to foster carer retention and provide guidance to foster care agencies about actions that they can take to maximize the retention of foster carers.     

Are risk preferences stable? Comparing an experimental measure with a validated survey-based measure

We examine the stability of risk preference within subjects by comparing measures obtained from two elicitation methods, an economics experiment with real monetary rewards and a survey with questions on hypothetical gambles. The survey questions have been validated by numerous empirical studies of investment, insurance demand, smoking and alcohol use, and recent studies have shown the experimental measure is associated with several real-world risky behaviors. For the majority of subjects, we find that risk preferences are not stable across elicitation methods. In interval regression models subjects’ risk preference classifications from survey questions on job-based gambles are not associated with risk preference estimates from the experiment. However, we find that risk classifications from inheritance-based gambles are significantly associated with the experimental measure. We identify some subjects for whom risk preference estimates are more strongly correlated across elicitation methods, suggesting that unobserved subject traits like comprehension or effort influence risk preference stability.     

The good life for children: Do we really care about the trends?

How do we know if Australian children and young people are having a ‘good life‘? What about their lives compared to children and young people in other countries? To answer these questions, the Australian Research Alliance for Children and Youth (ARACY) produced a Report Card to compare Australian average, Indigenous Australian average, and international or Organisation for Economic Co‐operation and Development (OECD) average for a number of measures of child and youth wellbeing. The ARACY Report Card shows that Australian results are average when compared to other OECD countries in most areas of child and youth wellbeing. Most importantly for nearly all indicators, Indigenous Australian children fare substantially less well than the Australian average and the majority of children in other countries. It is argued that community attitudes and behaviours toward children and young people, and our society's focus on wealth creation, are detrimental to children's and young people's wellbeing. The need for a better balance between economic progress and a socially and environmentally sustainable society is discussed, along with a strategy to better meet the emotional needs of children and young people.     

What can Social Psychologists Learn from Architecture? The Asylum as Example

In this paper I argue for a stronger consideration of the possible relationship between social psychology and architecture and architectural history. After a brief review of some of the ways in which other social psychologists have sought to develop links between social psychology and history, I consider the utility of architecture in more depth, especially to the social psychologist interested in the development of knowledge and understanding. I argue that, especially when knowledge is institutionalised, the design and use of buildings might have a particular contribution to make to the way we can understand how phenomena have been understood and approached in the past. Although many examples are relevant, I consider the case of the psychiatric hospital (or “asylum”) in more detail.     

What makes foster carers think about quitting? Recommendations for improved retention of foster carers

Ideation, or the formulation of ideas pertaining to a particular topic, is the precursor to individuals making significant life decisions. Many individuals think about foster caring long before they actually become carers, and it stands to reason that in many cases, carer discontinuation also follows a period of ideation. This being the case, it is possible that by monitoring ideation, interventions could be introduced to prevent placement disruptions occurring, particularly if the sources of dissatisfaction are known. Using a sample of 205 foster carers, a posteriori segmentation analysis identifies groups of carers dissatisfied with the same aspects of their role. One group is particularly dissatisfied with factors that are within the control of foster care agencies and also reports high levels of discontinuation ideation. Recommendations include that the individual support needs of carers be identified such that customized support can be offered, including boosting initial and ongoing training to manage expectations and ensure carers feel prepared for the role. Results also highlight the important role of caseworkers in making carers feel appreciated and taken seriously.     

Returning children home from care: What can be learned from local authority data?

International Human Rights and child rights conventions as well as U.K. wide legislation and guidance require that children in care should be returned home to one or both parents wherever possible. Reunification with parents is the most common route out of care, but rates of re‐entry are often higher than for other exit routes. This study used 8 years of administrative data (on 2,208 care entrants), collected by one large English local authority, to examine how many children were returned home and to explore factors associated with stable reunification (not re‐entering care for at least 2 years). One‐third of children (36%) had been reunified, with adolescent entrants being the most likely age group to return home. Three quarters (75%) of reunified children had a stable reunification. In a fully adjusted regression model, age at entry, being on a care order prior to return home, staying longer in care, being of minority ethnicity, and having fewer placements in care were all significant in predicting chances of stable reunification. The results underline the importance of properly resourcing reunification services. The methods demonstrate the value to local authorities of analysing their own data longitudinally to understand the care pathways for children they look after.     

Who cares about consent requirements for sourcing human embryonic stem cells? Are errors in the past really errors of the past?

Through an Access to Information Act request, we have obtained the consent forms used by the providers of every human embryonic stem cell (hESC) line approved for use by the Canadian Institutes of Health Research (CIHR), and examined them to verify whether or not they meet the consent requirements established by Canadian law and regulations. Our findings show that at least seven out of ten consent forms studied did not satisfy these minimum requirements. We then outline various options for responding to this situation in terms of: (i) remedial measures for dealing with executive problems with regulatory oversight procedures; and (ii) remedial measures for dealing with the impugned lines.