Behavioral Economics and Regulatory Analysis

Behavioral economics has captured the interest of scholars and the general public by demonstrating ways in which individuals make decisions that appear irrational. While increasing attention is being focused on the implications of this research for the design of risk‐reducing policies, less attention has been paid to how it affects the economic valuation of policy consequences. This article considers the latter issue, reviewing the behavioral economics literature and discussing its implications for the conduct of benefit‐cost analysis, particularly in the context of environmental, health, and safety regulations. We explore three concerns: using estimates of willingness to pay or willingness to accept compensation for valuation, considering the psychological aspects of risk when valuing mortality‐risk reductions, and discounting future consequences. In each case, we take the perspective that analysts should avoid making judgments about whether values are “rational” or “irrational.” Instead, they should make every effort to rely on well‐designed studies, using ranges, sensitivity analysis, or probabilistic modeling to reflect uncertainty. More generally, behavioral research has led some to argue for a more paternalistic approach to policy analysis. We argue instead for continued focus on describing the preferences of those affected, while working to ensure that these preferences are based on knowledge and careful reflection.     

Evaluating the Simplified Conjoint Expected Risk Model: Comparing the Use of Objective and Subjective Information

The simplified Conjoint Expected Risk (CER) model by Holtgrave and Weber posits that perceived risk is a linear combination of the subjective judgments of the probabilities of harm, benefit, and status quo, and the expected harm and benefit of an activity. It modifies Luce and Weber's original CER model—that uses objective information to evaluate financial gambles—to accommodate activities such as health/technology activities where values of the model variables are subjective. If the simplified model is a valid modification of the original model, its performance should not be sensitive to the use of subjective information. However, because people may evaluate information differently when objective information is provided to them than when they generate information on their own, the performance of the simplified CER model may not be robust to the source of model-variable information. We compared the use of objective and subjective information, and results indicate that the estimates of the simplified CER model parameters and the proportion of variance in risk judgments accounted for by the model are similar under these two conditions. Thus, the simplified CER model is viable with activities for which harm and benefit information is subjective.     

Concepts of Real and Imaginary Friendships in Early Childhood

This investigation focused on the friendship concepts of pre‐school‐aged children. Eighty‐four 3‐ to 5‐year‐old children responded to questions about social provisions, or benefits of relationships, available from reciprocal friends (both children in a pair nominate each other as friends), unilateral friends (one child nominates the other), non‐friends (neither child of a pair nominates the other), and imaginary friends (for those who had them). Results indicated that reciprocal and imaginary friends were the best sources of social provisions, followed by unilateral friends and non‐friends. Major implications are that children draw distinctions between reciprocal and unilateral friends based on the levels of social provisions available in these relationships, and that relationship schemas underlying relationships with imaginary companions may be akin to those for reciprocal friends. Children's friendship schemata may also differ by gender, as girls discriminated more than boys between reciprocal and unilateral friends for the social provision of companionship.     

EDUCATION AND OCCUPATIONAL SEX SEGREGATION:

Occupational sex segregation is estimated to account for a substantial portion of the sex gap in pay for full-time, year-round workers (England 1992). Although women's representation in many formerly male-dominated occupations has increased since 1972, women are still underrepresented in engineering. In 1993 women were awarded 14 percent of all engineering bachelors degrees and accounted for 8 percent of the U.S. engineering labor force. This study uses data from the 1980 senior sample of the High School and Beyond national longitudinal survey to model sex differences in the choice of engineering in college. Multinomial logit models of major choice are constructed as a function of individual-level attributes associated with high school preparation and gender role attitudes. Decomposition analysis indicates that average sex differences in these two areas explain between 8.8 and 33.4 percent of the sex gap. Policy implications are discussed.     

Early Childhood Developmental and Nutritional Training for Foster Parents

This exploratory study examined the effectiveness of a foster parent nutrition training program. Conducted in collaboration between Woman, Infants and Children (WIC) and a state foster care licensing agency, the study involved providing an intensive training to 11 self-selected foster parents. The participants completed pre-tests and post-tests related to their level of knowledge and comfort in the area of infant nutritional needs. Paired t-tests detected significant differences before and after the intervention, with participants reporting improved knowledge and understanding. While the sample was small and voluntary, the authors feel these pilot results merit further attention in the areas of practice and research.     

Foster parent perceptions of placement breakdown

The purpose of the study was to describe the perceived causes of placement breakdown by foster parents. Sixty-three foster parents from fifty families were asked to describe their challenges in response to the following question: “What would make you consider ending a foster placement”? The responses to this question were analyzed using multidimensional scaling and cluster analysis, to yield nine themes. Foster parents indicated that they would consider ending a placement if there was a danger to their family, if the child could not adapt to the home or if they could not handle the child's behavior. Participants reported that the complex health needs of a foster child, problems dealing with the foster agency, and several unsuccessful attempts to make the placement work would cause a placement to breakdown. Foster parents also indicated that they would consider ending a placement if their personal circumstances changed, their own health deteriorated, or there was a lack of appropriate external support in place. The results of the study point to gaps in the research on violence in general foster care, foster parent perceptions of contributions to a foster child's transition back to his or her birth family, and the process of foster parent decision-making in cases of placement breakdown.     

Linking Self‐Regulation and Risk Proneness to Risky Sexual Behavior: Pathways through Peer Pressure and Early Substance Use

The linkages between self‐regulation in childhood, risk proneness in early adolescence, and risky sexual behavior in mid‐adolescence were examined in a cohort of children (N=518) from the National Longitudinal Survey of Youth. The possible mediating role of two early adolescent variables (substance use and negative peer pressure) was also examined. Self‐regulation was assessed by maternal report at ages 8–9, and risk proneness, comprising aspects of sensation seeking and decision making, was assessed by adolescent self‐report at ages 12–13. Structural equation models predicting risky sexual behavior at ages 16–17 indicated that self‐regulation operated partly through early adolescent substance use, whereas risk proneness operated through early adolescent substance use and negative peer pressure. The overall model did not differ significantly for boys and girls, although there were gender differences in the strength of particular paths. These long‐term longitudinal results support the importance of early self‐regulation and risk proneness in setting the stage for adolescent sexual risk taking and implicate substance use and negative peer pressure as processes through which risk proneness and poor self‐regulation lead to risky sexual behavior.     

Parental Perspectives Regarding Poverty-Based Programs

Title I was created to eliminate the achievement gap and to provide additional support for children living at or below the poverty threshold. In order to be able to evaluate and adjust programs designed to academically serve children in poverty, educators need parental involvement and insight. Unfortunately, collecting such information has proven difficult. The purpose of this study was to try to find a means to generate parental perspectives on the value of poverty-based programs and on how these programs contribute to academic success for their children. The researchers found such a means by forming collaborative relationships with social workers, and gained valuable insights from parents into whether these programs are viewed as helping children succeed academically and on how programs should be altered.     

Neural Correlates of Human and Monkey Face Processing in 9‐Month‐Old Infants

Behavioral and electrophysiological evidence suggests a gradual, experience‐dependent specialization of cortical face processing systems that takes place largely in the 1st year of life. To further investigate these findings, event‐related potentials (ERPs) were collected from typically developing 9‐month‐old infants presented with pictures of familiar and unfamiliar monkey or human faces in 2 different orientations. Analyses revealed differential processing across changes in monkey and human faces. The N290 was greater for familiar compared to unfamiliar faces, regardless of species or orientation. In contrast, the P400 to unfamiliar faces was greater than to familiar faces, but only for the monkey condition. The P400 to human faces differentiated the orientation of both familiar and unfamiliar faces. These results suggest more specific processing of human compared to monkey faces in 9‐month‐olds.