Is Economics a Science?

by Robert J. Shiller

Project Syndicate
November 6, 2013

I am one of the winners of this year’s Nobel Memorial Prize in Economic Sciences, which makes me acutely aware of criticism of the prize by those who claim that economics – unlike chemistry, physics, or medicine, for which Nobel Prizes are also awarded – is not a science. Are they right?

One problem with economics is that it is necessarily focused on policy, rather than discovery of fundamentals. Nobody really cares much about economic data except as a guide to policy: economic phenomena do not have the same intrinsic fascination for us as the internal resonances of the atom or the functioning of the vesicles and other organelles of a living cell. We judge economics by what it can produce. As such, economics is rather more like engineering than physics, more practical than spiritual.

There is no Nobel Prize for engineering, though there should be. True, the chemistry prize this year looks a bit like an engineering prize, because it was given to three researchers – Martin Karplus, Michael Levitt, and Arieh Warshel – “for the development of multiscale models of complex chemical systems” that underlie the computer programs that make nuclear magnetic resonance hardware work. But the Nobel Foundation is forced to look at much more such practical, applied material when it considers the economics prize.

The problem is that once we focus on economic policy, much that is not science comes into play. Politics becomes involved, and political posturing is amply rewarded by public attention. The Nobel Prize is designed to reward those who do not play tricks for attention, and who, in their sincere pursuit of the truth, might otherwise be slighted.

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The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2013

It Captures Your Mind

by Cass R. Sunstein

New York Review of Books
September 26, 2013

There is a great deal of unlovely jargon within the federal government. The product of an activity is called “the deliverable.” A task that follows a meeting is called a “do-out.” A request for action is described as “the ask.” If someone needs to continue a discussion with a colleague, he will promise to “circle back.” If a project must be abandoned or put on hold because of competing demands on people’s time and attention, the problem is one of “bandwidth.” Of course such terms can be found in many other places, including in businesses, but they are used with particular regularity in Washington, D.C.

Of the various unlovely terms, “bandwidth” is the most useful and the most interesting. The central idea is that public officials have the capacity to focus on, and to promote and implement, only a subset of the universe of good ideas. Bandwidth is limited partly for political reasons. In any particular period, members of Congress, executive branch officials, and the public itself may be unwilling to support more than a small set of proposals. But much of the problem involves the limits of time and attention. A proposed reform might seem excellent, and it might even be able to attract considerable political support, but the minds of the people who might pursue it are occupied, and they do not have the time to learn about it and to explore its merits. Within government, some good ideas fail to go anywhere, not because anyone opposes them, but because the system lacks the bandwidth to investigate them.

Economists focus on the problem of scarcity—on how people allocate their resources (including both time and money) in the face of many competing demands. In their extraordinarily illuminating book, the behavioral economist Sendhil Mullainathan and the cognitive psychologist Eldar Shafir explore something quite different, which is the feeling of scarcity, and the psychological and behavioral consequences of that feeling. They know that the feeling of scarcity differs across various kinds of experiences and that people can feel “poor” with respect to money, time, or relationships with others.

But their striking claim, based on careful empirical research, is that across all of those categories, the feeling of scarcity has quite similar effects. It puts people in a kind of cognitive tunnel, limiting what they are able to see. It depletes their self-control. It makes them more impulsive and sometimes a bit dumb. What we often consider a part of people’s basic character—an inability to learn, a propensity to anger or impatience—may well be a product of their feeling of scarcity. If any of us were similarly situated, we might end up with a character a lot like theirs. An insidious problem is that scarcity produces more scarcity. It creates its own trap.

Because they lack money, poor people must focus intensely on the economic consequences of expenditures that wealthy people consider trivial and not worth worrying over. Those without a lot of time have to hoard their minutes, and they may have trouble planning for the long term. The cash-poor and the time-poor have much in common with lonely people, for whom relationships with others are scarce. When people struggle with scarcity, their minds are intensely occupied, even taken over, by what they lack.

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‘Nudge’ Back in Fashion at White House

Time
August 9, 2013

When a White House adviser sent out an e-mail last month announcing that she was looking to hire social scientists to study human behavior and design public policy based on social experiments, right-wing critics were aghast: Barack Obama was going too far again.

The inspiration for Yale social scientist Maya Shankar’s team, she said in her note, is Britain. It’s in the Old World that the White House has gone looking for something new, calling a gang of consultants in the United Kingdom an inspiration. There, the so-called Behavioral Insights Team has taken a controversial philosophy and found solutions from lowering energy consumption to increasing tax collection.

The squad was established a mere three years ago, following Prime Minister David Cameron’s ascension to power. Referred to in Whitehall patois as the nudge unit, the team was inspired by the 2009 bestselling book, Nudge: Improving Decisions About Health, Wealth and Happiness by University of Chicago professor Richard Thaler and Harvard Law professor Cass Sunstein. Cameron’s political mandate was simple: influence British policies by constructing cheap, shrewd and local solutions to social problems across governmental agencies.

The nudge unit appears to have succeeded where one of its inspirations could not. During the first three years of the Obama administration, Sunstein led the Office of Information and Regulatory Affairs where he was charged with approving every new regulation the government issued based on cost-benefit analysis. Sunstein has written that his efforts were hamstrung by a political climate suspicious of his ideas. Last year several important regulations were halted before the presidential election and Sunstein’s subsequent book, Simpler: The Future of Government describes the difficulty of new thinking into government. With an entire team to focus on streamlining costs and regulation across the government, the new team is aiming to improve on Sunstein’s record.

Working at the intersection of psychology and economics, the nudge unit in Britain has tackled a number of problems ranging from reducing car theft by offering containers to de-clutter garages to increasing repayment of court fines through a text message system.

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Science Is Not Your Enemy: An impassioned plea to neglected novelists, embattled professors, and tenure-less historians

by Steven Pinker

New Republic
August 6, 2013

The great thinkers of the Age of Reason and the Enlightenment were scientists. Not only did many of them contribute to mathematics, physics, and physiology, but all of them were avid theorists in the sciences of human nature. They were cognitive neuroscientists, who tried to explain thought and emotion in terms of physical mechanisms of the nervous system. They were evolutionary psychologists, who speculated on life in a state of nature and on animal instincts that are “infused into our bosoms.” And they were social psychologists, who wrote of the moral sentiments that draw us together, the selfish passions that inflame us, and the foibles of shortsightedness that frustrate our best-laid plans.

These thinkers—Descartes, Spinoza, Hobbes, Locke, Hume, Rousseau, Leibniz, Kant, Smith—are all the more remarkable for having crafted their ideas in the absence of formal theory and empirical data. The mathematical theories of information, computation, and games had yet to be invented. The words “neuron,” “hormone,” and “gene” meant nothing to them. When reading these thinkers, I often long to travel back in time and offer them some bit of twenty-first-century freshman science that would fill a gap in their arguments or guide them around a stumbling block. What would these Fausts have given for such knowledge? What could they have done with it?

We don’t have to fantasize about this scenario, because we are living it. We have the works of the great thinkers and their heirs, and we have scientific knowledge they could not have dreamed of. This is an extraordinary time for the understanding of the human condition. Intellectual problems from antiquity are being illuminated by insights from the sciences of mind, brain, genes, and evolution. Powerful tools have been developed to explore them, from genetically engineered neurons that can be controlled with pinpoints of light to the mining of “big data” as a means of understanding how ideas propagate.

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Darwin’s humbling lesson for business

by John Kay

Financial Times
July 2, 2013

Your correspondent is sitting below a large and ugly statue of Charles Darwin, overlooking the bay where the great scientist stepped ashore on Chatham, now San Cristobal, the most easterly of the Galápagos Islands I am here to discuss the ways in which evolutionary theory can contribute to our understanding of social sciences.

It seems barely possible that careful observation of finches, mockingbirds and tortoises could fundamentally change the way we think about the world. But in the 19th century it did. The Galápagos, 700 miles from the mainland of Ecuador, contain flora and fauna that differ from those of the rest of the world and differ, but less, from island to island. The genius of Darwin was to apprehend the process by which this pattern came about.

Evolution is a process with three elements; variation, selection and replication. Changes happen, a few of these changes yield advantages, and such changes tend to be reproduced in subsequent generations. The extraordinary outcome – so far-reaching in its implications that Darwin hesitated to publish his ideas – is that designs of extraordinary complexity and efficiency can be achieved without the aid of a designer. Designs can emerge beyond the comprehension of any individual.

That insight, and the mechanics of variation, selection and replication, are relevant to many problems other than the origin of species. Modern business has developed as a result of the variation that comes from experiments in products and business methods, the selection by customers and capital markets of adaptations that add value (and the rejection of those that do not), and the replication by competitors of strategies that succeed.

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How Do Societies Avoid Collapse?

Property & Environment Research Center
June 7, 2013

Economic research has long been subject to a pitfall: it lacks a laboratory in which to carry out simple experiments. Unlike sciences such as physics or chemistry, economic data are messy, imperfectly measured, and affected by any number of unknown variables. This makes it difficult to understand how humans and markets actually work.

The field of experimental economics attempts to address these challenges. Using controlled laboratory experiments and computer programs, researchers are able to take a more scientific approach to understand human behavior, and they are often uncovering new revelations about the way human societies work. Long-time friend of PERC and former board member Vernon Smith won the 2002 Nobel Prize in economics for his experimental economics research, which sought to go beyond mathematical abstractions and understand the role human institutions play in creating social rules and order.

Bart Wilson is a colleague and coauthor of Vernon Smith at the Economic Science Institute at Chapman University and a 2013 PERC Lone Mountain Fellow. This week, Bart visited PERC to explore how societies form rules and order. He even tested a laboratory experiment on the PERC staff to further demonstrate how human institutions emerge and how those institutions respond to sudden and dramatic changes. The experiment reveals something about how societies avoid collapse.

Here’s how it worked: Each PERC participant was provided a laptop and given instructions on how to navigate a virtual world resembling early human agricultural settlements. Players must harvest renewable resources—either green or yellow patches—to maintain a health rating. Each colored patch has a numerical value. The more health earned throughout the game, the more reward paid at the end of the experiment. The game is divided into “weeks” in which players can harvest and consume one resource per week.

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The Economic Sense in Game of Thrones

by Matt McCaffrey and Carmen Dorobăț

Mises Daily
June 7, 2013

[Editor's Note: This article is spoiler-free.]

The popular HBO series Game of Thrones is ending its third season this Sunday, amid fan concerns over its rapidly dwindling cast of characters. The show is based on George R.R. Martin’s intricate fantasy series, A Song of Ice and Fire, which has become an inspiration for commentary of all stripes. And while its complex and morally ambiguous characters have attracted many political and literary analysts, there are important economic lessons to be learned from the books as well.

Martin’s story touches on a variety of economic issues, from the implications of not having an economic system at all, to the problems of money and public finance. In another article (and in an interview), we have discussed these latter problems, and explained how the rulers of the continent of Westeros resort to the traditional methods of public finance: taxation, borrowing, and inflation.

The Political and Economic Means

In this article we will be discussing some of the other economic implications of the series, especially ideas about the social order and the role that peaceful cooperation, trade, and money play in the organization of society. Franz Oppenheimer famously distinguished between the “political means” and the “economic means” of organizing society. The former involves the forcible redistribution of wealth; wealth, however, is only created by those involved in the economic means of organization, which consists of peaceful production, trade, and exchange (1926, pp. 24-27).

This distinction shines through quite clearly in A Song of Ice and Fire. For instance, peoples as different as the Dothraki and the ironmen are stark examples (no pun intended) of the political means. Both societies produce little or nothing of their own, instead thriving on violence and plunder. A perfect illustration is found in the “words” (motto) of House Greyjoy, which proclaim, “We Do Not Sow.” The implication of course is that the men of the Iron Islands only reap the fruits of what others have sown.[1] The Greyjoy words are a very apt description of the state, which is a fundamentally parasitic institution depending for its survival on the plundering of a productive populace.

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See also

  

Darwin, the Greatest Psychologist

by Allen Frances

Project Syndicate
June 4, 2013

Most people do not think of Charles Darwin as a psychologist. In fact, his work revolutionized the field. Before Darwin, philosophical speculation shaped our psychological understanding. But even great philosophers – Plato, Aristotle, Hobbes, Hume, Locke, Kant, Schopenhauer, Nietzsche, and others – could only describe current mental events and behaviors; they could not explain their causes.

Darwin provided the profound understanding that evolution has influenced the shape of our minds as strongly as it has the shape of our bodies. Since humans evolved from the same primate ancestor as modern chimpanzees or gorillas, he suggested one could learn more by comparing human instincts, emotions, and behaviors to those of animals than one can surmise from subjective speculation. As he put it, “he who understands baboon would do more towards metaphysics than Locke.”

Philosophy is inadequate to understand the roots of human psychology, because self-reflection does not make us aware of the forces that drive most of our reactions to the environment. Rather, we are subject to inborn tendencies, which develop through the reciprocally influential forces of natural and sexual selection.

Natural selection is the process by which the variants within a species that are best adapted to survive in their environment win the reproductive contest – at least until an even better-adapted variant comes along. The traits that enable people to feed and protect themselves increase the likelihood that they will live long enough to produce offspring, whom they will be able to feed and protect until maturity.

In a sense, sexual selection is the psychological extension of natural selection. But, instead of gaining an advantage from traits that enhance one’s ability to survive, one gains an advantage from qualities that potential mates have evolved to find appealing.

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Money can buy happiness

Economist
May 2, 2013

The Easterlin paradox, named for economist Richard Easterlin, reckons that higher incomes do not necessarily make people happier. Since Mr Easterlin first made his conjecture in 1974, economists' views have evolved: money matters, studies suggest, but only up to a point. Become rich enough, and a bigger paycheque no longer leads to more happiness. Yet a new NBER working paper by economists Betsey Stevenson and Justin Wolfers, both of the University of Michigan, casts doubt on this chestnut. They use a trove of data generated by Gallup, a polling firm, from its World Poll. Gallup asked respondents around the world to imagine a "satisfaction ladder" in which the top step represents a respondent's best possible life. Those being polled are then asked where on the ladder they stand (from zero to a maximum of 10), and how much they earn. Though some countries seem happier than others, people everywhere report more satisfaction as they grow richer. Even more striking, the relationship between income and happiness hardly changes as incomes rise. Moving from rich to richer seems to raise happiness just as much as moving from poor to less poor. One never really grows tired of earning more.

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Game Theory: Jane Austen Had It First

Michael Chwe

by Jennifer Schuessler

New York Times
April 22, 2013

It’s not every day that someone stumbles upon a major new strategic thinker during family movie night. But that’s what happened to Michael Chwe, an associate professor of political science at the University of California, Los Angeles, when he sat down with his children some eight years ago to watch Clueless, the 1995 romantic comedy based on Jane Austen’s Emma.

Mr. Chwe (pronounced CHEH), the author of papers like “Farsighted Coalitional Stability” and “Anonymous Procedures for Condorcet’s Model: Robustness, Nonmonotonicity and Optimality,” had never cracked Emma or Pride and Prejudice. But on screen, he saw glimmers of a strategic intelligence that would make Henry Kissinger blush.

“This movie was all about manipulation,” Mr. Chwe, a practitioner of the hard-nosed science of game theory, said recently by telephone. “I had always been taught that game theory was a mathematical thing. But when you think about it, people have been thinking about strategic action for a long time.”

Mr. Chwe set to doing his English homework, and now his assignment is in. Jane Austen, Game Theorist, just published by Princeton University Press, is more than the larky scholarly equivalent of Pride and Prejudice and Zombies. In 230 diagram-heavy pages, Mr. Chwe argues that Austen isn’t merely fodder for game-theoretical analysis, but an unacknowledged founder of the discipline itself: a kind of Empire-waisted version of the mathematician and cold war thinker John von Neumann, ruthlessly breaking down the stratagems of 18th-century social warfare.

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Forging a new field of social neuroscience

by William Harms

University of Chicago
April 22, 2013

Knowing when someone is being harmed on purpose is a crucial element of moral thinking, even in children. But University of Chicago neuroscientist Jean Decety’s work has shown that people's neural response to intentional harm varies by age, with adults being more discriminative in determining moral culpability.

Fellow scholar John Cacioppo has pioneered the study of loneliness, showing that it can influence a person’s health as much as cigarette smoking, obesity, or a lack of exercise. A sense of isolation affects key cellular processes within the brain, heart, and immune system, Cacioppo has found.

Their work on how people’s social lives relate to neural, hormonal, and genetic mechanisms has helped define a field called social neuroscience. Cacioppo and Decety formally established the international, interdisciplinary Society for Social Neuroscience in 2010 and have since turned UChicago into a global center for its study by launching a number of research projects to examine the brain and body’s responses to the social world.

“I realized that we will never be able to understand such human ability as moral judgment or empathy without studying the brain, its development, and evolutionary history,” says Decety, the Irving B. Harris Professor in Psychology and Psychiatry, who studies brain scans to examine the neurobiological mechanisms of empathy.

“We can’t limit our study of people strictly to their biological functions. We are influenced by our social connections,” says Cacioppo, the Tiffany & Margaret Blake Distinguished Service Professor in Psychology, who coined the term “social neuroscience” more than 20 years ago. “Gene expression can be turned on or off, for example, by social conditions.”

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Consumers, Too, Seek Closure

by Daniel Akst

Wall Street Journal
April 10, 2013

Choosing is hard and buyer’s remorse is easy. So when consumers make a choice, particularly a hard choice, they’re happier with it if they perform some small act that emphasizes the finality of their decision.

In four studies covered by a newly published paper, researchers found that “choice closure” inhibits people’s tendency to reconsider and increased the chooser’s satisfaction. In one study, participants were asked to choose from an array of chocolates on a covered tray, but only some of the volunteers were asked to restore the lid after choosing. Later, those lid restorers reported liking their chocolate more than those who hadn’t restored the lid. A similar result came from another study involving choosing foods and then closing—or not closing—the menu.

The findings are consistent with prior research showing that people often are happier with irrevocable choices, which promote rationalizing and make it harder to conduct post-choice comparisons.

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When Your Boss Makes You Pay for Being Fat

Wall Street Journal
April 5, 2013

Are you a man with a waist measuring 40 inches or more? If you want to work at Michelin North America Inc., that spare tire could cost you.

Employees at the tire maker who have high blood pressure or certain size waistlines may have to pay as much as $1,000 more for health-care coverage starting next year.

As they fight rising health-care costs and poor results from voluntary wellness programs, companies across America are penalizing workers for a range of conditions, including high blood pressure and thick waistlines. They are also demanding that employees share personal-health information, such as body-mass index, weight and blood-sugar level, or face higher premiums or deductibles.

Corporate leaders say they can't lower health-care costs without changing workers' habits, and they cite the findings of behavioral economists showing that people respond more effectively to potential losses, such as penalties, than expected gains, such as rewards. With corporate spending on health care expected to reach an average of $12,136 per employee this year, according to a study by the consulting firm Towers Watson, penalties may soon be the new norm.

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Avoid Impulsive Acts by Imagining Future Benefits

Science Daily
April 3, 2013

Why is it so hard for some people to resist the least little temptation, while others seem to possess incredible patience, passing up immediate gratification for a greater long-term good?

The answer, suggests a new brain imaging study from Washington University in St. Louis, lies in how effective people are at feeling good right now about all the future benefits that may come from passing up a smaller immediate reward. Researchers found that activity in two regions of the brain distinguished impulsive and patient people.

“Activity in one part of the brain, the anterior prefrontal cortex , seems to show whether you’re getting pleasure from thinking about the future reward you are about to receive,” explains study co-author Todd Braver, PhD, professor of psychology in Arts & Sciences. “People can relate to this idea that when you know something good is coming, just that waiting can feel pleasurable.”

The study, which was published in the first issue of the Journal of Neuroscience this year, was designed to examine what happens in the brain as people wait for a reward, especially whether people characterized as “impulsive” would show different brain responses than those considered “patient.”

The lead author of the study was Koji Jimura, then a postdoctoral researcher in Braver’s Cognitive Control and Psychopathology Laboratory, and now a research associate professor at the Tokyo Institute of Technology, in Japan.

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Brain Scans Predict Who’s Likely to Commit Crime

by Daniel Akst

Wall Street Journal
April 3, 2013

Researchers using magnetic resonance imaging have found that they can predict which inmates are likeliest to break the law again after they’re released.

In a study of 96 male offenders in New Mexico, scientists found during a four-year follow-up that those with low activity in the anterior cingulate cortex were twice as likely to commit another offense as those who had high activity in this brain region. The researchers figured this out by asking participants to take a “go/no go” test that involved pressing a button every time they saw the letter X on screen, but being careful not to press when they saw the letter K. MRIs performed during this test mapped brain activity.

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The Brains of the Animal Kingdom

by Frans de Waal

Wall Street Journal
March 22, 2013

Who is smarter: a person or an ape? Well, it depends on the task. Consider Ayumu, a young male chimpanzee at Kyoto University who, in a 2007 study, put human memory to shame. Trained on a touch screen, Ayumu could recall a random series of nine numbers, from 1 to 9, and tap them in the right order, even though the numbers had been displayed for just a fraction of a second and then replaced with white squares.

I tried the task myself and could not keep track of more than five numbers—and I was given much more time than the brainy ape. In the study, Ayumu outperformed a group of university students by a wide margin. The next year, he took on the British memory champion Ben Pridmore and emerged the "chimpion."

How do you give a chimp—or an elephant or an octopus or a horse—an IQ test? It may sound like the setup to a joke, but it is actually one of the thorniest questions facing science today. Over the past decade, researchers on animal cognition have come up with some ingenious solutions to the testing problem. Their findings have started to upend a view of humankind's unique place in the universe that dates back at least to ancient Greece.

Aristotle's idea of the scala naturae, the ladder of nature, put all life-forms in rank order, from low to high, with humans closest to the angels. During the Enlightenment, the French philosopher René Descartes, a founder of modern science, declared that animals were soulless automatons. In the 20th century, the American psychologist B.F. Skinner and his followers took up the same theme, painting animals as little more than stimulus-response machines. Animals might be capable of learning, they argued, but surely not of thinking and feeling. The term"animal cognition" remained an oxymoron.

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Happiness? When It Comes to Rewards, Don’t Count On It

by Daniel Akst

Wall Street Journal
March 15, 2013

Unequal treatment tends to make people unhappy. But unequal rewards make people less unhappy when those rewards can’t be counted.

In a series of nine experiments, mostly involving Chinese volunteers, a pair of researchers found that offering unequal rewards for some arbitrary task—in the form of different sized slices of cake, for example—provoked less dissatisfaction than unequal rewards consisting of money.

Moreover, people who missed out on an imaginary buy one, get one free shampoo deal were more upset than those who missed out on the same additional quantity of shampoo packaged in a single larger bottle.

Easily quantifiable rewards such as cash or frequent flyer miles enable people to focus all too easily on how much was received rather than how enjoyable the reward is apart from its quantity, the researchers suggest.

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Cash can bribe dieters to lose weight, study finds

by Marilynn Marchione

Associated Press
March 7, 2013

Willpower apparently can be bought. The chance to win or lose $20 a month enticed dieters in a yearlong study to drop an average of 9 pounds — four times more weight than others who were not offered dough to pass up the doughnuts.

Many employers, insurers and Internet programs dangle dollars to try to change bad habits like smoking or not exercising, but most studies have found this doesn't work very well or for very long.

The new study, done with Mayo Clinic employees, was the longest test yet of financial incentives for weight loss. Doctors think it succeeded because it had a mix of carrots and sticks — penalties for not losing weight, multiple ways to earn cash for succeeding, and a chance to recoup lost money if you fell off the "diet wagon" and later repented.

Incentives are "not like training wheels where people learn healthy habits and then will continue them on their own" — you have to keep them up for them to work, said one study leader, Dr. Steve Driver of Mayo in Rochester, Minn.

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What do the numbers say? A cost-benefit analysis of love and sex

by Zosia Bielski

The Globe and Mail
February 28, 2013

How’s your marriage portfolio doing?

In her book Dollars And Sex: How Economics Influences Sex and Love, University of British Columbia economics professor Marina Adshade suggests that almost every option, decision and outcome in love and sex is better understood when you look at matters through an economic lens.

Adshade reveals how economics trickle down to our most intimate moments, affecting everything from teen pregnancy rates to child care. While people don’t consciously do the “promiscuity math” every time they fall into bed with someone, she reveals how economic factors shift consequences in our lives, and how this shapes the way men and women behave. Adshade spoke to The Globe and Mail from Vancouver.

Is it politically incorrect to view sex and love via economics – unless you’re talking about straight-up prostitution, where value is easily measured? It makes everything people do seem opportunistic.

Somebody said to me the other day that this is a very cold perspective. The value of the economic approach is to offer some clarity on the decisions that we ourselves make. These are decisions that we can measure: how people match on income or education or political beliefs and how long those marriages last and how happy those people are.

Let’s turn to some of your counterintuitive findings: Birth control has actually increased unintended pregnancy rates outside of marriage. How?

The rate planet-wide is surprisingly high, given how much technology we have to control our own fertility. The unintended consequence of access to contraceptives is that you get more unintended pregnancies because social norms have evolved in a way that allow people to more freely express their sexuality. When more people have sex outside of marriage, you’re bound to get more pregnancy and child birth outside of marriage.

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EEG experiment proves that money can buy happiness (first-ever scale to measure pleasure)

by Monica Diana Bercea

NeuroRelay
January 29, 2013

As we’re all so busy rushing through life, it’s easy to miss the moments of pleasure. Neuroscientists have revealed how everyday pleasure rank against each other and it’s official: money CAN buy happiness, reveals first ever pleasure scale. Winning £10 was all it took to dramatically increase people’s feelings of pleasure. Following closely behind this was the level of pleasure generated by affection. As for playing with puppies and kittens, puppies generated the highest feeling of pleasure in all participants, proving the belief that dogs really are a man’s best friend. As for chocolate, the test also proved just a tiny taste is all it takes to generate a significant pleasure boost.

Recording people’s brainwaves while they were placed in different situations, neuroscientists from Birkbeck University have calibrated the first-ever scale to measure pleasure. Using MyndPlay EEG (electroencephalography) headsets to measure an individual’s brain activity, neuroscientists were able to create a scale enabling them to place a numerical value on the level of pleasure people gain from different experiences. Rating between -100 (most displeasurable) and +100 (most pleasurable) and based on intensity and duration of brain activity, various emotions such as affection, play, good fortune, visual stimulation and achievement were tested.

Women were found to find life more pleasurable, recording an average of 66.4 on the pleasure scale, while men fell behind at 58.2. In addition, men were revealed as most affected by winning money, scoring as high as 90.1 when they were surprised with £10, while women were less impressed, scoring 79.3.

Here is how researchers made the first ever scale for pleasure:

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University of London-Birkbeck College Press Release

The Irrational Consumer: Why Economics Is Dead Wrong About How We Make Choices

by Derek Thompson

Atlantic
January 16, 2013

A new paper reviews how psychology, biology, and neurology are ganging up on economics to prove that, when it comes to making decisions, people are anything but rational.

Daniel McFadden is an economist. But his new paper, "The New Science of Pleasure," shows the many ways economics fails to explain how we make decisions -- and what it can learn from psychology, anthropology, biology, and neurology.

The old economic theory of consumers says that "people should relish choice." And we do. Shopping can be fun, democracy is better than its alternatives, and a diverse and fully stocked grocery store ice cream freezer is quite nearly the closest thing to heaven on earth. But other fields of science tell a more complicated story. First, making a choice is physically exhausting, literally, so that somebody forced to make a number of decisions in a row is likely to get lazy and dumb. (That's one reason why stores place candy near the check-out aisle: They suspect your brain is too zonked to resist.) Second, having too many choices can make us less likely to come to a conclusion. In a famous study of the so-called "paradox of choice", psychologists Mark Lepper and Sheena Iyengar found that customers presented with six jam varieties were more likely to buy one than customers offered a choice of 24.

If you've read the work of Dan Ariely or Daniel Kahneman, you know exactly how far from perfectly rational we are when faced with a decision. Many of our mistakes stem from a central "availability bias." Our brains are computers, and we like to access recently opened files, even though many decisions require a deep body of information that might require some searching. Cheap example: We remember the first, last, and peak moments of certain experiences. So when we make a choice about how to spend a certain amount of time -- say, by going to Six Flags -- we forget that most of the time at an amusement park is spent waiting around doing nothing. Instead, we remember the thrill of the roller coaster. (This has been previously used to explain why people sometimes go back to disappointing old romantic partners, but that might be for another article.)

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Gender Differences in Doing Favors

by Daniel Akst

Wall Street Journal
January 11, 2013

If the question is, “Can you do me a favor?” the answer is a lot more likely to be yes if the request is made of a woman.

That’s the implication of two studies conducted by six self-described “overcommitted ‘semi’-workaholic women” and presented at the recent annual meeting of the American Economics Association. In one study, MBA students were asked to recall agreeing to a favor on the job at a time when they preferred to say no. The female participants did the favor even though they were five times likelier to report having felt worn out, perhaps because they were also twice as likely to have been worried about the consequences of saying no.

In a second study, this one involving altruistic behavior in small groups, female undergraduates were 50% more likely to comply with an implicit request for a favor than were male students. The willingness of women to do favors in the workplace may lead them to become overburdened with low-skill tasks, making promotion less likely, the researchers said.

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Cerebral circuitry

by April Dembosky

Financial Times
January 3, 2013

I am flying. No plane, no wings, just me soaring over rooftops with a mild flip in my belly as I dip closer to the grid of city streets. I lean to the right to curve past a skyscraper, then speed up and tilt left to skirt by a tree. There has been an earthquake and I am looking for a lost child who is diabetic and needs insulin.

This is not a dream. I am awake, wearing my normal clothes – no cape or leotard – standing squarely on both feet in a room of the virtual reality laboratory at Stanford University.

About 70 test subjects have done the same simulation, half of them flying in a virtual helicopter, the other half granted the virtual superpower of flight. Half from each group have a mission: find and save the lost child.

After the simulation, head gear returned to a hook on the wall, a researcher reaches for her clipboard to ask a few questions. She accidentally knocks over a tin of pens. In sociology studies, this is a classic trick for measuring altruistic intent. The test subjects who flew Superman-style rushed to help clean up the spill. They responded four seconds faster and picked up two more pens on average than the helicopter passengers.

“If you are flying, you feel very powerful, so the sense of having power made people more generous, more altruistic,” says Robin Rosenberg, a clinical psychologist in San Francisco who helped design the study, accepted for publication in the e-journal Plos One. “It could also be that the desire to be helpful was directly related to conscious or unconscious associations to Superman,” she adds.

Many new technologies begin with such virtuous goals of making the world a better place and its citizens better people. But many come with hidden costs that take time to surface. Now that mainstream internet sites such as Google, Facebook and Amazon are all in close reach with a few touches of the smartphone in your pocket, the human side-effects of being constantly connected are starting to emerge.

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See also

Brazilian student auctions virginity

CNN
January 2, 2013

A Brazilian student set off a firestorm in her hometown by putting her virginity up for auction.

 

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How To Make Better New Year’s Resolutions

by Ray Fisman

Slate
December 31, 2012

It’s that season again, when we resolve to accomplish a list of goals in the coming year. Not infrequently, these are the goals that we were resolved to accomplish during the preceding year.

If you were to ask Princeton psychologist Eldar Shafir or Harvard economist Sendhil Mullainathan for a better New Year’s strategy, they’d likely suggest that the best resolution you can make is to do fewer things in 2013. The researchers argue that when busy people get busier, it leads to ignored deadlines, a cluttered desk, and a vicious cycle of falling further and further behind. Amid the disorder, a lot of bad decisions get made, and the best means of escape from this cycle may be a moratorium on new obligations.

Shafir and Mullainathan are leaders in the field of behavioral economics, which aims to apply insights from psychology to the study of economic decision-making. In their recent work, summarized in the forthcoming book, Scarcity: Why Having Too Little Means So Much, they use behavioral economics to explain why conditions of scarcity—whether of time or money—often lead people to make bad decisions.

Mullainathan and Shafir describe the problem of managing money as being akin to packing a suitcase. Someone with plenty of time has a near-empty suitcase. It requires little attention or effort to decide whether to go to a movie on the spur of the moment. By contrast, those with crowded schedules have a full suitcase: Adding a new item means removing something that’s already been packed. Deciding how to rearrange your metaphorical suitcase takes time and energy and can lead to stress and sleepless nights. Indeed, the shortage of space itself can be responsible for bad decisions that, in turn, only make the problem worse.

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