Saturday, November 22, 2014

Summary of our fourth ESRC Workshop on Preferences and Personality (21/11/14)

Thanks everybody for attending our fourth ESRC workshop on “Personality and Preferences” in Stirling on Friday November 21st. It was the fourth of our six workshops funded by the ESRC that are taking place in 2014/15. 

We had excellent presentations and interesting discussions with many new ideas emerging from the different economic and psychological perspectives on common topics. Some of the main talking points which arose were:
  • The importance of the subjective versus the objective.
  • Average effects versus individual heterogeneity.
  • The differences between the measurement of economic preference parameters in experimental settings versus the psychological measurement of traits using scales and how both approaches can complement each other.
  • The external and internal validity of various economic and psychological measures.
  • Different standards to evaluate the quality of measures in economics and psychology.
  • The use of personality psychology to explain individual differences in biased decision-making.
  • The importance of background variables (e.g. social context) on economic preferences.
  • The malleability of preferences. 
  • The question why incentivised experiments are considered best practice in economics.
  • The domain-specificity of preferences.
  • The psychometrics of economic preferences and economic games. 
  • The change of preferences and personality over the life course. 
  • Preference measures in children and adults.
  • The difference between averages in personality and the distribution of personality.

Some more information about the workshop's aims, the abstracts of the talks, and pictures are below. Details of future workshops will be provided via the mailing list, the blog and our twitter account

 
Aims

One of the major challenges in economics is understanding the statistical properties of measures of time, risk, and social preferences and evaluating the validity of such measures. This workshop focuses on empirical research examining economic preferences in laboratory and real-world settings. Speakers addressed the reliability of traditional preference measures, their structure across demographic characteristics, innovations in measurement, and links between preference estimates and objective economic and biological measures. We have invited speakers who are engaged in the theoretical and empirical mapping of preference measures to personality traits which have been shown to have substantial predictive validity for important life outcomes (e.g. income, disease morbidity and mortality, employment). Taken together, this workshop aimed to enhance cross-talk and expand the common conceptual ground that exists between personality psychologists and economists interested in the assessment of preferences in the UK and Europe. Furthermore, aimed to cultivate frontier thinking regarding the future data-collection priorities for social science in the UK and further afield.
 
Presentations


Professor Alex Wood (Stirling Behavioural Science Centre)
Integrating personality psychology and economics
 

Alex introduced the day's topic and gave an overview of the research conducted at the Centre on preferences and personality, suggesting that we need a second wave of behavioural economics that integrates personality psychology into economics in order to better explain individual differences.





Bernardo Fonseca Nunes (Stirling Behavioural Science Centre)
Transition to retirement and home production: personality explains heterogeneous changes in housework at retirement 

Previous studies on home-production at retirement do not consider the role of individual personality traits on the time retirees devote to housework. Here we examine whether personality determines the heterogeneous changes on the time individuals devote to housework due to a transition to retirement from the labour market. We use British longitudinal data which included individuals’ personality measures, and responses about the amount of hours spent per week on housework tasks. We find a positive change in housework hours for male and female retirees. Personality traits are shown to be more relevant on the explanation of housework changes at retirement than consumption expenditures, household income, and gender.

Dr. Christopher Boyce (Stirling Behavioural Science Centre)
Individual differences in loss aversion: Does personality predict how life satisfaction responds to losses versus gains in income? (with Alex Wood and Eamonn Ferguson).
 
Loss aversion is generally regarded as a pervasive bias occurring regardless of context or decision-maker. No studies have examined the relationship between personality and loss aversion. Here, using data from Germany (N = 18,039), we examine whether the effect of income losses (versus income gains) on life satisfaction differ by personality. We show that, although there are no personality differences in how gains relate to life satisfaction, when experiencing an income reduction people higher on conscientiousness (versus those lower) exhibited larger declines in life satisfaction. Similarly, those lower on openness (versus those higher) experienced larger life satisfaction falls. Our results suggest; (a) important individual differences in loss aversion, (b) personality interacts with socio-economic events to influence life satisfaction, (c) some personality traits may promote resilience in this context, and (d) income relates to life satisfaction only for individuals that experience income losses, and have high conscientiousness or low openness.

Professor Marjon Van Pol (University of Aberdeen)
Measuring time preferences: insights from the health context 


There is a relatively large empirical literature on individual time preferences for health outcomes. This interest has been stimulated by policy concerns around health behaviours such as obesity and smoking and by the debate on the appropriate discount rate in the case of health outcomes. It could be argued that the literature on time preferences for health has been more innovative in terms of elicitation methodologies used and methodological questions that have been examined. This presentation will reflect on a range of measurement issues that have been observed in the context of time preferences for health including framing effects, decision heuristics and negative time preferences. Measurement issues will be demonstrated using a number of case studies. General lessons for the elicitation of time preferences will be drawn out. The presentation will finish with a discussion around predictive validity: does type of outcome in time preferences tasks matter for the predictive validity of life outcomes such as health?

Dr. Bart Golsteyn (University of Maastricht)
Risk attitudes across the life course 

This paper investigates how risk attitudes change over the life course. Even with panel data that span several years, age patterns are generally difficult to identify separately from cohort or calendar period effects. We provide first evidence on the age profile of risk attitudes all the way from early adulthood until old age, in large representative panel data sets from the Netherlands and Germany, using a proxy variable approach to achieve identification. The main result is that willingness to take risks decreases over the life course, linearly until approximately age 65 after which the slope becomes flatter.



Dr. Elisa Cavatorta (King's London)
Measuring ambiguity preferences (with David Schroeder Birkbeck).
 
Ambiguity preferences are important in explaining human decision-making in many areas in economics and finance. To measure ambiguity preferences, the experimental economics literature advocates using incentivized laboratory experiments. However, in many circumstances, carrying out complex lab-experiments is not feasible. In this paper, we evaluate the ability of thought experiments and attitudinal questions to generate a behaviourally valid measure of ambiguity preferences. We find that a small set of thought experiments and attitudinal questions can serve as an alternative measure when carrying out laboratory experiments is impractical. Our results can be useful in many situations that require measuring ambiguity preferences in an easily implementable and cost-effective way, such as large surveys, field experiments, or everyday business and finance applications.

Dr. Hannah Schildberg-Hörisch (University of Bonn)
How does parental socio-economic status shape a child’s personality? (with Thomas Deckers, Armin Falk, Fabian Kosse).

We show that socio-economic status (SES) is a powerful predictor of many facets of a child's personality. The facets of personality we investigate encompass time preferences, risk preferences, and altruism, as well as crystallized and fluid IQ. We measure a family's SES by the mother's and father's average years of education and household income. Our results show that children from families with higher SES are more patient, tend to be less likely to be risk seeking and more altruistic, and score higher on IQ tests. About 20 to 40% of this relationship can be explained by dimensions of a child's environment that are shown to differ by SES: parenting style, quantity and quality of time parents spend with their children, the mother's IQ and economic preferences, a child's initial conditions at birth, and family structure. Moreover, we use panel data to show that the relationship between SES and personality is fairly stable over time at age 7 to 10.

Personality profiles that vary systematically with SES offer an explanation for social immobility. In a companion study, we present evidence on a randomly assigned variation in life-circumstances, providing children with a mentor for the duration of one year. Our data reveal a significant increase in altruism in the treatment relative to the control group. These findings thus provide evidence in favor of a causal effect of social environment on the formation of altruism. Moreover, we show that enriching life-circumstances bears the potential to close the observed developmental gap in altruism between low and high SES children.

Professor Sule Alan (University of Essex)
Good Things Come to Those Who (Are Taught How to) Wait: Results from a Randomized Educational Intervention
 
We report results from a randomized evaluation of a unique educational intervention targeted at elementary school children in 3rd and 4th-grade in Turkey. The program, which lasts eight weeks, uses case studies to discuss issues related to forward looking behavior, improve the ability to imagine future-selves and evaluate different contingencies arising from different actions, supplemented by classroom activities supervised by trained teachers. We find that treated students make more patient intertemporal choices in incentivized experimental tasks. The effect is stronger for students who are identified as present-biased in the baseline. Furthermore, using official school administrative records, we find that treated children are significantly less likely to receive a low “behavioral grade”. These results are persistent one year after the intervention, replicate well in a different sample, and are robust across different experimental preference elicitation methods.

Professor Eamonn Ferguson (Nottingham)
Personality and Pro-Social Preferences 

In his presentation, Eamonn highlighted some differences between personality psychology and economic preference elicitation procedures and suggested to apply psychometric principles to economic games in order to better understand what these games actually measure, showcasing his recent research on social preferences elicited through economic games such as ultimatum and dictator games.  


 Group picture with speakers and organisers:

Tuesday, November 18, 2014

The changing meaning of the Trait Self-Control scale

The trait self-control scale, developed by Tangney, Baumeister and Boone (2004) is one of the most used instruments in social science. It is the main modern reference for measuring a person's self-control, as evidenced by its 1,400 citations on Google Scholar. However, recent research suggests that the scale does not measure what researchers originally thought it did. Although suggested by its first item “I am good at resisting temptation”, the scale does not appear to measure the ability to resist temptation. Rather, it seems to measure people's ability to avoid temptations in the first place. Below is brief summary of some parts of a lecture I gave to the MSc Behavioural Science students on the changing meaning of the trait self-control scale.

The 13-item trait self-control scale asks people to rate on a scale from 1 to 5 how much certain statements reflect how they are. The questions include, for example, “I am lazy”, “I say inappropriate things”, and “I wish I had more self-discipline” and a higher cumulative score is considered indicative of better trait self-control. Higher scores on this measure have been used to predict outcomes as diverse as interpersonal popularity, healthy relationships, academic success, coping skills, mental health, psychological well-being, obesity, substance abuse, criminality, impulsive buying, and procrastination (for a comprehensive list of references see the meta-analysis by de Ridder et al., 2012). Members of the Stirling Behavioural Science Centre have also used the scale to examine how it relates to time preferences and emotion (see Daly et al., 2009 and  Daly et al. 2012). Until recently, it was commonly assumed that trait self-control predicts these lifetime outcomes so well because the outcomes are related to our ability to be strong in the face of temptations and resist them.

Sticky Toffee Pudding (STP)
A recent study by Hofmann, Baumeister, Foerster & Vohs (2012) suggests otherwise. The authors investigated the relationship between scores on the trait self-control scale and real-life self-control failures. In their “beeper study”, they provided 205 participants with smartphones and beeped them at random times, 7 times per day for a full week. Whenever the participants heard the beep, they were supposed to indicate (i) whether they felt a desire (e.g. for sticky toffee pudding), (ii) how strong the desire was (e.g. irresistible), (iii) whether the desire conflicted with higher order goals (e.g. being healthy), (iv) whether they tried to resist the desire (i.e. used self-control), and (v) whether the desire led to actual behaviour (e.g. eating the STP).

The authors expected that people with a high trait self-control score who found themselves tempted by desires (e.g. for STP or for cookies) would be better at resisting the temptation than people with a low trait self-control score. Exercising this kind of willpower has been the canonical conception of what it means to have good self-control since Walter Mischel's famous experiments in the 1960s examined the ability of children to resist the temptation of eating a marshmallow placed in front of them. However, to the surprise of Hofmann and his colleagues, the results of the study revealed that trait self-control was negatively related to the use of self-control in everyday life. In other words, the higher a person's score on the trait self-control scale, the less often they used self-control in their daily lives.

Resisting the Sirens or taking a different route home?
This is clearly at odds with the conventional view that high trait self-control is related to a strong ability to resist temptations which conflict with higher order goals. On the contrary, it suggests that trait self-control is a proactive trait. Individuals with high scores on the trait self-control scale aren't necessary better at resisting temptations; rather they appear to encounter fewer problematic desires by structuring their lives such that they avoid being exposed to the temptations in the first place. Instead of tying themselves to the mast to resist the sirens of temptation, people with high trait self-control just “take a different route home” (as Roy Baumeister explains here).

Further evidence suggesting that trait self-control is indeed related to avoiding, rather than resisting, temptations is described in Ent et al. (2015) and the meta analysis by de Ridder et al. (2012). There are several things we can learn from this recent shift in researchers' perceptions of what the trait self-control scale really measures:

1. Critically reflecting on what psychological scales mean is important even when the scales are extremely popular. New ways of data gathering may shed new light on scales.
2. Leaving the lab and testing things in the real-world can lead to new insights. In the future, we should conduct more behavioural science research in people's real lives.
3. Understanding what leads to temptations is as important as understanding what helps us to resist them. We need to better understand the person-specific and situation-specific factors that lead to temptations, and trait self-control is just one of them. For example, in my 2012 paper I described an economic formalization of how situational factors such as cues can trigger temptations.


References

Daly, M., Harmon, C. P., & Delaney, L. (2009). Psychological and biological foundations of time preference. Journal of the European Economic Association, 7(2‐3), 659-669.

Daly, M., Baumeister, R. F., Delaney, L., & MacLachlan, M. (2014). Self-control and its relation to emotions and psychobiology: evidence from a Day Reconstruction Method study. Journal of behavioral medicine, 37(1), 81-93.

deRidder, D. T., Lensvelt-Mulders, G., Finkenauer, C., Stok, F. M., & Baumeister, R. F. (2012). Taking stock of self-control a meta-analysis of How trait self-control relates to a wide range of behaviors. Personality and Social Psychology Review, 16(1), 76-99.

Ent, M. R., Baumeister, R. F., & Tice, D. M. (2015). Trait self-control and the avoidance of temptation. Personality and Individual Differences, 74, 12-15. 

Hofmann, W., Baumeister, R. F., Förster, G., & Vohs, K. D. (2012). Everyday temptations: an experience sampling study of desire, conflict, and self-control. Journal of Personality and Social Psychology, 102(6), 1318.

Lades, L. K. (2012). Towards an incentive salience model of intertemporal choice. Journal of Economic Psychology, 33(4), 833-841

Tangney, J. P., Baumeister, R. F., & Boone, A. L. (2004). High self‐control predicts good adjustment, less pathology, better grades, and interpersonal success. Journal of Personality, 72(2), 271-324.

Workshop on Unemployment and Well-Being: Evidence and Policy Directions (5/12/14)

Unemployment and Well-Being: Evidence and Policy Directions
A key question for policy is the relationship between well-being and unemployment. A substantial body of literature has demonstrated a causal impact of unemployment on a wide range of measures of well-being. However, there has been increasing interest in the extent to which well-being and psychological distress may themselves condition labour market outcomes.

This workshop will examine key evidence in this area and discuss implications for policy and for future research. It will take place in Stirling University on December 5th 2014. The workshop is funded by the Marie Curie Career Integration scheme and is organised by Professor Liam Delaney and Dr Michael Daly of Stirling Management School’s Behavioural Science Centre. Registration is free and participants can sign up on the link below. 

Sign up to attend the workshop here

Speakers confirmed so far include:

11:00-11:30: Registration & Coffee

11:30-12:15:Childhood psychological factors influencing life-long unemployment trajectories.
Professor Liam Delaney (Stirling Behavioural Science Centre)

12:15-13:00: Do open youth unemployment and youth programs leave the same mental health scars? Evidence from a Swedish 27-year cohort study.
Professor Matthias Strandh (Umea University)

Abstract: Unemployment experiences have long been linked with reduced mental health. Recent findings suggest that the mental health costs of unemployment may have been underestimated in the past and that youth unemployment in particular can create both short- and long-term mental health scars. The main policy tools for dealing with young people at risk of labor market exclusion are Active Labor Market Policy programs for youths (youth programs). Research on these programs has primarily focused on labor market effects; there has been little emphasis on their potential effects on mental health and even less on whether participation in such programs alleviates the long-term mental health scarring caused by unemployment. This study uses a Swedish 27-year prospective cohort study initiated in 1981 with waves at ages 16, 18, 21, 30 and 43 to investigate how open unemployment and participation in youth programs between ages 18 and 21 are related to internalized mental health symptoms at ages 21 and 43. Our results indicate that open unemployment among youths leads to significant mental health scarring at both 21 and 43 whereas there was little or no such scarring among youth program participants.

13:00-14:00: Lunch

14:00-14:45: Well-Being in Welfare-to-Work Jobs.
Professor Andreas Knabe (Madgeburg University):

We used the Day Reconstruction Methods to measure the emotional well-being of people in welfare-to-work jobs in Germany. We interviewed about 350 persons in such employment schemes (along with equal numbers of employed and unemployed persons). Our data show that people in welfare-to-work jobs are less satisfied with their life than regularly employed people, but their life satisfaction is much higher than that of unemployed persons. Interestingly, their emotional well-being appears to be the highest of the three groups. We discuss potential explanations of these findings and policy implications.

14:45-15:30: Childhood Self-Control, Recession and Unemployment.
Mark Egan (Stirling Behavioural Science Centre)
Abstract: The capacity for self-control may underlie successful labor force entry and job retention, particularly in times of economic uncertainty. Our analysis of unemployment data from two nationally representative British cohort studies (N=16,941) found that low childhood self-control was associated with the emergence and persistence of patterns of unemployment across four decades. On average a 1SD increase in self-control was associated with a reduction in unemployment of a quarter or 1.4 percentage points after adjustment for intelligence and social class. From labor market entry to middle-age those with low self-control experienced 1.7 times more months of unemployment than those with high self-control. Analysis of monthly unemployment data during the 1980s recession showed that those with low self-control suffered the greatest increases in unemployment during this period. Our results underscore the critical role of self-control in shaping lifespan trajectories of occupational success and in affecting how macroeconomic conditions shape population unemployment levels.

15:30-16:00: Coffee

16:00-16:45: Behavioural Insights into the Youth Employment Services.
Dr. Denise Hawkes (Institute of Education)

Sunday, November 16, 2014

Childhood psychological distress and youth unemployment: Evidence from two British cohort studies

Liam, Michael and I have a new paper out in Social Science & Medicine which looks at the relationship between psychological distress in early life and youth unemployment. This paper is part of my PhD thesis which looks more broadly at psychological predictors of unemployment.

The abstract and Figure 2 from the paper are reproduced below:

AbstractThe effect of childhood mental health on later unemployment has not yet been established. In this article we assess whether childhood psychological distress places young people at high risk of subsequent unemployment and whether the presence of economic recession strengthens this relationship. This study was based on 19,217 individuals drawn from two nationally-representative British prospective cohort studies; the Longitudinal Study of Young People in England (LSYPE) and the National Child Development Study (NCDS). Both cohorts contain rich contemporaneous information detailing the participants' early life socioeconomic background, household characteristics, and physical health. In adjusted analyses in the LSYPE sample (N = 10,232) those who reported high levels of distress at age 14 were 2 percentage points more likely than those with low distress to be unemployed between ages 16 and 21. In adjusted analyses of the NCDS sample (N = 8985) children rated as having high distress levels by their teachers at age 7 and 11 were 3 percentage points more likely than those with low distress to be unemployed between ages 16 and 23. Our examination of the 1980 UK recession in the NCDS cohort found the difference in average unemployment level between those with high versus low distress rose from 2.6 pct points in the pre-recession period to 3.9 points in the post-recession period. These findings point to a previously neglected contribution of childhood mental health to youth unemployment, which may be particularly pronounced during times of economic recession. Our findings also suggest a further economic benefit to enhancing the provision of mental health services early in life.

Figure 2. Descriptive unemployment statistics in Study 2 from August 1974–November 1981 by levels of childhood distress. The year above the cohort members' age refers to March of that year, the month when the cohort members were born. The vertical line denotes the onset of the U.K. recession in January 1980.

Saturday, November 15, 2014

Dublin Behavioural and Experimental Finance Colloquium

Below is the programme for the Dublin Behavioural and Experimental Finance Colloquium being organised by TCD's Brian Lucey and DCU's Michael Dowling.

The first DBEF Symposium is to be held on 6 December 2014, in the Sutherland Center, 6th Floor, Arts Building, TCD.  The papers are noted below and will be presented by the underlined/italicised author. Complete papers and presentations, when available, will be linked here.

A small (€25) fee applies for anyone not an undergraduate or postgraduate student. Proof of this will be required. Payment will be by PayPal, and a link will be emailed when you fill in the form below. Please note space is limited. Presenting authors are of course exempt.  Each paper will be presented for a max of 30m , and a the conclusion of the session papers questions will be taken.

0915-0930 : Introduction to the colloquium and to the Journal of Behavioural And Experimental Finance Brian Lucey and Michael Dowling

0930-1100 Session 1 Placement

Frenemies: Information Sharing Among Competing Fund Managers Bernard  Ganglmair U Texas at Dallas ; Alex Holcomb & Noah Myung  Naval Postgraduate School and University of Virgini

Under-pricing of IPO’s in Experimental Markets Sascha Füllbrunn, Radboud University Nijmegen, Tibor Neugebauer University of Luxembourg Andreas Nicklisch University of Hamburg

1115-1245 Session 2 People

CEO Social Status and Corporate Acquisitiveness Michael Dowling, Liam Gallagher and Yulia Plaksina, Dublin City University

Trading and beliefs in markets with information flows – does market micro-structure matter? Caroline Bonn & Florian Lindner University of Innsbruck, David Schindler , Ludwig Maximilian University of Munich

1345-1500 Session 3 Products

The “Objective Valuation” Task: A New Technique for the Study of Product Complexity Pete Lunn, Economic and Social Research Institute (ESRI) & Trinity College Dublin

Behavioral Aspects of the Regulation of retail gasoline prices Martin Angerer  & Georg Peter U Liechtenstein

1500-1700 Session 4 Psychology

Taking Individual Financial Responsibility Dirk Brounen, Kees Koedijk, and Rachel Pownall Tilburg University

Psychological Barriers in Traded Metal Prices Mark Cummins and Michael Dowling, Dublin City University Brian Lucey Trinity College Dublin

Risk preferences, finance and constitutional change Liam Delaney, Stirling

1700-1800 Keynote   

Behavioral Finance From the Mind to the Market  Greg B. Davies, Barclays

Text message reminders to parents improved child literacy

York & Loeb (2014), Early Literacy Text Messaging Early Literacy Text Messaging, NBER Working Paper

Abstract: Substantial systematic differences exist in children’s home learning experiences. The few existing parenting programs that have shown promise often are not widely accessible, either due to the demands they place on parents’ time and effort or cost. In this study, we evaluate the effects of READY4K!, a text messaging program for parents of preschoolers designed to help them support their children’s literacy development. The program targets the behavioral barriers to good parenting by breaking down the complexity of parenting into small steps that are easy-to-achieve and providing continuous support for an entire school year. We find that READY4K! positively affected the extent to which parents engaged in home literacy activities with their children by 0.22 to 0.34 standard deviations, as well as parental involvement at school by 0.13 to 0.19 standard deviations. Increases in parental activity at home and school translated into student learning gains in some areas of early literacy, ranging from approximately 0.21 to 0.34 standard deviations. The widespread use, low cost, and ease of scalability of text messaging make texting an attractive approach to supporting parenting practices.

New York Times writeup of the study here.

Thursday, November 13, 2014

Stirling Behavioural Science Centre YouTube channel

Stirling Behavioural Science Centre has launched a YouTube channel. Its purpose is to act as a curation service for interesting behavioural science videos, rather than to produce original content (at least for now). YouTube is replete with excellent talks by world renowned speakers in the field, including not only 10-20 minute TED style talks, but also lectures and Q&A sessions than can run into several hours. So far there are 9 playlists covering a few major topics but this will be expanded in coming weeks. Suggestions for videos or new playlist topics are welcome.