This paper uses a cross-country representative sample of Europeans over the age of 50 to analyse whether individuals’ height is associated with higher or lower levels of well-being. Two outcomes are used: a measure of depression symptoms reported by individuals and a categorical measure of life satisfaction. It is shown that there is a concave relationship between height and symptoms of depression. These results are sensitive to the inclusion of several sets of controls reflecting demographics, human capital and health status. While parsimonious models suggest that height is protective against depression, the addition of controls, particularly related to health, suggests the reverse effect: tall people are predicted to have slightly more symptoms of depression. Height has no significant association with life satisfaction in models with controls for health and human capital.
Thursday, September 30, 2010
How would you like it done Sir? Harsh or Severe?
The UK government announced its austerity package today; it’s harsh. But how does it size-up to Irelands plans-in-the-making? Opposition members in the HOC were quick to point to Ireland and our governments belief that we could cut our way out of the economic problem; Brian Lenihan’s we’ve turned a corner speech last year was the focal point of their ridicule.
Such ridicule, if heeded, may be good for Ireland; it is becoming clear now that Ireland's "misguided austerity" could actually be a key thing that helps Ireland grow! albeit indirectly via less severe global austerity. In any event, I think it is interesting to place the newly announced UK austerity plan in an Irish perspective. In simple capita terms the UK is just shy of being 14 times bigger than Ireland. We can compute some basic figures off this fact to make some quick comparisons. I also think doing so will help put the fairly animated debates in the UK over their cuts into some perspective for us here.
I’ll just run some of today’s headline figures –
UK Public sector four-year austerity package in Irish terms: €7bn
UK Public sector job cuts in Irish terms: 35,000 jobs
UK Welfare cuts in Irish terms: €575m
UK Extra social care in schools in Irish terms: €165m
UK Axing quangos in business, innovation and skills sector in Irish terms: ~ 2 quangos; €30m
Saturday, September 25, 2010
Berg and Gigernenzer - Behavioral Economics: Neoclassical Economics in Disguise
As-If Behavioral Economics: Neoclassical Economics in Disguise?
Nathan Berg
University of Texas at Dallas - School of Economic, Political and Policy Sciences
Gerd Gigerenzer
Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Human Development
January 1, 2010
History of Economic Ideas, Vol. 18, No. 1, pp. 133-166, 2010
Abstract:
For a research program that counts improved empirical realism among its primary goals, it is surprising that behavioral economics appears indistinguishable from neoclassical economics in its reliance on “as-if” arguments. “As-if” arguments are frequently put forward in behavioral economics to justify “psychological” models that add new parameters to fit decision outcome data rather than specifying more realistic or empirically supported psychological processes that genuinely explain these data. Another striking similarity is that both behavioral and neoclassical research programs refer to a common set of axiomatic norms without subjecting them to empirical investigation. Notably missing is investigation of whether people who deviate from axiomatic rationality face economically significant losses. Despite producing prolific documentation of deviations from neoclassical norms, behavioral economics has produced almost no evidence that deviations are correlated with lower earnings, lower happiness, impaired health, inaccurate beliefs, or shorter lives. We argue for an alternative non-axiomatic approach to normative analysis focused on veridical descriptions of decision process and a matching principle – between behavioral strategies and the environments in which they are used – referred to as ecological rationality. To make behavioral economics, or psychology and economics, a more rigorously empirical science will require less effort spent extending “as-if” utility theory to account for biases and deviations, and substantially more careful observation of successful decision makers in their respective domains.
Keywords: bounded rationality, ecological rationality, as-if, fit, prediction, decision, process
JEL Classifications: D03, B1, B4
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