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Lizz Platt
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The idea that a simple picture on a pack of cigarettes can decrease a person’s odds of purchasing and their willingness to pay is amazing. The presence of a deterrent on the package seems intuitive, but what the authors show is that the difference between a written warning versus a pictorial warning is significant. In the experiment, a scale of pictures was used to measure the participants’ feelings. The scale is much like something one would see at a doctor’s office as a measure of pain. In my opinion, this is an easier way to vocalize one’s feeling rather than placing words to emotions. I was particular impressed by the “concerns and broader implications” section. While I was reading, I kept going back to the idea that the effects of these warnings may decrease over time. As people become immune and ignore the picture of infected organs, the effect may fade away. Rather than shying away from the issues within the study, the authors present them in greater detail. By recognizing the limitations to the study, results become more practical. Possibilities for future research also lead future studies and policy changes to better the public welfare are established. In future research it would be beneficial to better understand the long-term effects of the emotional stimulus and if the same results are seen with similar goods, such as alcohol.
Toggle Commented Nov 10, 2015 on ECON 398 for next Tuesday at Jolly Green General
I found the distinction between affect and emotion to be fascinating. In contrast to everyday life, studies must use extremely specific vocabulary rather than interchanging affect and emotion. The authors point out valence as a term known for its use in chemistry and physics. In the case of behavioral economics, valence distinguishes between positive and negative affect and the corresponding utility. By employing specific language, researchers can better understand the influence of emotion. However, an examination into valence is not enough to understand decision-making. In the first example of a goal-activation mechanism different emotional states were induced. The researchers found a distinction in participant’s social value orientation. Some were pro-socials while others were pro-selfs and it was found that cooperation was altered by induced emotions. The results of this study were interesting because it shows how emotions interact with individual dispositions. Going forward, I would be interested to see if the researchers had a way to predict which category a person fit into before inducing the emotion. Do other tests such as questionnaires indicate a person’s social tendency and predict how emotions will alter with cooperation? I would be interested in other experiments similar to this one and if researchers have any practical implications for policy-making or societal institutions.
Toggle Commented Nov 3, 2015 on Econ 398 at Jolly Green General
This chapter brought up a great deal of information on emotions I had yet to consider. Specifically, the section focused on studies about individual differences in empathy is something I had never thought of. Madison mentioned that from the beginning she wondered about the differences in empathy. However, other than people diagnosed with Asperger’s, I had never considered that there were empathy differences between individuals. I assumed everyone had trouble watching the ASPCA commercials in the exact same way I do. Not only do people experience empathy to different degrees, but also 10% of the population is thought to have alexithymia, a lack of emotional awareness. Less than 1% of the population has Asperger’s and, within that 1%, approximately half are observed to have alexithymia, according to the text. This information is fascinating in itself but even more fascinating that, by using an fMRI, neuroscientists can see the distinct sections of the brain affected. Individuals with alexithymia show less activation in the AI, one of the parts of the pain matrix. Considering this information with the work Professor Casey has mentioned with sea turtles would be interesting. Going further with this idea, I would be interested to see how people with differing levels of empathy act after an interaction with sea turtles. Do those with higher levels of empathy have a higher willingness to pay for conservation? Are they more likely to donate money to a conservation fund directly after the interaction? Do people with alexithymia have the same willingness to pay before and after an interaction? How do personal preferences interact with individual levels of empathy?
Toggle Commented Oct 27, 2015 on econ 398 next two weeks at Jolly Green General
I found the section about carry-over effects on decision-making fascinating not only with regard to the study of behavioral economics but also concerning everyday life choices. The incidental affect is an affective state that is unrelated to the decision but can shift choices. Studies cited in the text show how the introduction of stress through mechanisms of cold water or public speaking with evaluations exaggerates a person’s tendencies. Specifically, participants were seen to be even more risk-averse in the gain domain and even more risky in the loss domain after exposure to stress. This study led me to wonder if this same shift in behavior is seen in people living below the poverty line. Living in poverty would lead to greater stress and this stress might lead to a change in behavior. When presented with a loss domain situation, are people with low incomes more likely to take risky strategies than those with higher incomes? Do people in poverty experience more instances of loss domain, leading to an increased incidence of risky behavior? The authors also examine gender differences when under stress. Lighthall et al. concludes males under stress increased their risk taking while women decreased risky behavior. In Professor Shester’s Women in Economics class, we have discussed reasoning for differences in negotiating behavior of men and women. One major explanation in the literature is risk aversion in women. Females tend to take more conservative routes while men are willing to choose a riskier strategy with a potentially larger payout. I would consider a salary negotiation stressful in the sense that the stakes are high and may cost the player a job if they aim too high. It is similar to the stress induction mechanism seen in the previous study because one must publicly present their offer to a potential employer and the employer is free to offer negative or positive feedback. Considering negotiations in light of the Lighthall et al.’s study, gender differences are further explained. As negotiations continue, women might decrease their risk taking, similar to a decrease in pumps per balloon, and settle for a lower salary. Men, on the other hand, might continue to take risks, as seen in an increase in pumps per balloon, and have a larger payout in the form of a higher salary.
Toggle Commented Oct 19, 2015 on ECON 398 at Jolly Green General
The design and practice section showed a side of experiments I had not given much thought. The authors give the example of using the word partner versus counterpart in the instructions. Altering one word can produce significantly different outcomes. Anonymity is another way the experiment can ensure the outcome is not a result of perceptions or other unrelated factors that cannot be controlled. I can imagine how these slight differences would change my actions in a dictator style game. For example, the word partner would probably cause me to divide the money more equally. Also, if I saw the “partner” or even had the chance to interact with him or her, I would divide the money differently depending on my own opinions of the other person. After reading this section, I began to think about how a single word can change our actions as a society. Climate change versus global warming is one way in which society reacts to specific connotations. Using the term global warming, people start to think every day must be sweltering and snow should not exist. However, the term climate change is beginning to promote the true effects allowing people to understand extreme weather and the global temperature rather than the day-to-day weather. It would be interesting to see how other changes to words have altered society’s, as well as my own, opinions and outcomes.
Toggle Commented Oct 6, 2015 on ECON 398 at Jolly Green General
The author began with an explanation of the merger between economics and neuroscience to better understand individual behavior. This combination appears to be a great mixture of human behavior and scientific proof of reasoning. Many people discredit the social sciences due to their lack of cause and effect or clinical research. However, a balance between economics and neuroscience may provide the “concrete” evidence people need to better understand society. It leads me to wonder what other fields of study can utilize the knowledge available through neuroscience. Personally, I feel policy-making can greatly benefit from the paring of neuroscience and economics. The DRPE hypothesis, in particular, focuses on rewards that are attractive to the decision-making process. With the ability to better understand human behavior, policies in education or social programs can better capture the beneficial rewards and remove the disadvantageous parts. The research can be used to better each nation depending on their citizen’s rewards and predictions. Overall, neuroeconomics has the potential to make a substantial impact on society’s welfare.
Toggle Commented Sep 21, 2015 on ECON 398 at Jolly Green General
Are tourists willing to pay additional fees to protect corals in Mexico? Group 7: Peter Partee, Elizabeth Platt, Sarah Knenlein, and Stephen Sims Using contingent valuation, Casey, Brown, and Schehmann interviewed 400 tourists in the Riviera Maya to determine their willingness-to-pay to protect the coral reefs of the area. By using a discrete choice system, they presented tourists with one of two surveys. Results showed that 99.2% believed the corals reefs should be protected. However, only 84.7% were willing to pay a form of an entrance fee to protect the coral reefs. This discrepancy between those that value the natural resource and those willing to pay shows the issue of a free-rider problem seen in public goods. Those whom do not pay the fee still have access to the service the coral reefs provide. Many tourists unwilling to pay such an entrance fee cited their apprehensive of the Mexican government to appropriately use funds. One option of collecting an entrance fee, estimated to total $100 to $400 million annually, cited in the paper is in the form of an airplane tax. However, tourists residing in Mexico or surrounding areas within driving distance are immune to a tax added to airplane fees. Cruise ship vacationers, also, would not pay the tax because they arrived in the area on a form of transportation other than airplanes. Thus, the estimate of $100 to $400 million annually is too high if these factors were not taken into account. An airplane tax, which is favored by Americans, appears to be have low costs in collection of the tax, but does not collect the tax from every tourist that vacations in the area, allowing the free-rider issue to persist. Reviewing the data, the survey showed that 92.7% of the surveys were conducted in sunny weather compared to the 7.3% in cloudy or hazy weather. Our group questioned the significance of the weather when conducting the survey. Our best conclusion was that the state of the weather has the potential to have an effect on the respondents answer. If the weather is sunny and beautiful, respondents may be more likely to not see an issue with the environment making them less likely to pay to protect the coral reefs. In order to more accurately understand the significance between weather and response, the survey should be repeated in a larger variety of weather conditions. The data also showed that scuba divers were willing to pay less than snorkelers. As a group, we discussed possible reasons for this difference in willingness-to-pay. On possible explanation is similar to the explanation given for those interviewed at the Yal-Ku Lagoon. The authors hypothesized that those interviewed after snorkeling in the Lagoon would be willing to pay more. However, the opposite was true and may be attributed to the current condition of the coral reefs. After seeing the poor condition, respondents may believe their money would have little to no impact. The same may be true for snorkeling versus scuba diving. Respondents that recently went scuba diving were closer to the coral reefs and had the opportunity to see more of the current condition. Snorkels, on the other hand, may not have witnessed such an up close encounter to the reef and have a stronger belief that their money can protect the coral reefs. Overall, however, our group did not fully understand the reasoning behind the strong difference in willingness-to-pay when comparing snorkelers and scuba divers.
The rule of information freely available and distributed through the digital economy does hurt the GDP, but the GDP should not be the only factor when determining what is best for society. The GDP is a simple model to measure the transactions in the economy. One piece of information the GDP does not account for is human capital. In order to continue progressing as a society, we must invest in human capital and with the digital economy, this can be achieved. Wikipedia and Goggle do rob encyclopedia makers of profit, but these sites are more practical to today’s society and allow people to have knowledge at their fingertips at all times. This knowledge, in theory, increases the productivity of people and encourages new innovations. New industries have grown out of the digital age creating new jobs and businesses. Pairing an increase in productivity of human capital with other factors such as political stability, investment, and public capital, aids in growth of the economy and the nation in the long run. Without the digital age, society and the economy would not have grown in the way that it did in the last two decades, and the United States would have been forced looked for growth in other fields.
Toggle Commented Nov 19, 2013 on Link from Twitter at Jolly Green General
The authors bring up the notion that policy makers must understand the marginal propensity of citizens in order to create the best fiscal policy. However, policy makers must also examine the forms in which fiscal policy can take. Government transfers in the form of social security and Medicare have a smaller effect on the economy when compared to tax cuts. The study within the article shows that poorer households have a larger marginal propensity to consume compared to wealthier households. By cutting the taxes of poorer households, even by a small percent, allows households to have a larger disposable income. With this extra income, citizens will spend or pay off debt adding to the economy due to the multiplier effect. On the other hand, transfers have a smaller effect on the economy because citizens tend to not spend the entire transfer amount. Thus, policy makers must look at many aspects of the economy and consumers in addition to their marginal propensities.
On the surface, the decrease in unemployment rate appears to be a good thing. But this statistic should not be the only factor examined. The unemployment rate for workers with less than a high school degree dropped to 10.3%. This statistic could show, as others have stated, that more people are choosing to invest in their education rather than entering the workforce. The article also states that this could be due to the fact that the population is aging and many older workers tend lack a high school degree. Another factor that should be considered with this statistic is how it will affect society in the future. Students on the brink of dropping out of high school could interpret this drop in unemployment rate as a reason to enter the workforce. If they believe the chances of a job are greater for those without a high school diploma, they may choose to see school as a waste and leave. However, this is not the case. Individuals choosing to make this decision will have greater chances of living in poverty and society as a whole will not see an increase in human capital. Education leads to greater human capital and possibilities for expansion in the economy. Thus, a decrease in unemployment for workers with less than a high school degree benefits the economy in the short run, but has the opportunity to harm it in the long run.
I agree that one of the most important issues is keeping stability in the leadership of the Fed. Monetary policies do not change the economy overnight, but rather they require time and effort. If the chair of the FRB did not remain fairly consistent with their predecessor’s policies, the economy would never exhibit the changes. Yellen, after working under Bernanke, has already observed the meetings and heard the arguments for and against the monetary actions of the Fed. Thus, she has had firsthand involvement and, paired with her record of good judgment, encompasses a great deal of proficiency as a candidate. In addition to her credentials, Yellen also would become the first female chair of the FRB. Research has shown women participating in government tend to be more qualified than their male counterparts. Women tend to judge themselves harsher than men and are less likely to be nominated due to lack of inter-gender networking. These issues cause fewer numbers of women than men to lead in the government. With Yellen’s historic nomination, she would pave the way for women across the nation to become more involved in economic issues and leadership positions.
Toggle Commented Sep 26, 2013 on Link from Twitter at Jolly Green General
Reich proposes the idea that the free market is not truly free just as all economists have argued for ages that nothing is technically free. But rather than the opportunity costs preventing a free market, Reich discusses the rules set by society. Not every rule Reich identifies is an effect of the clout attained by the powerful. The idea of what can be owned and traded becomes a moral regulation set by the ethical standards of society. Slaves, unsafe foods, and votes, to name a few examples, are unethical and immoral to sell or trade. Although many citizens have the possibility to gain great deals of wealth through means of selling these items, morality becomes an issue. Much like the idea of the Invisible Hand, in which each member of the market working independently naturally creates a competitive market, the moral standards create the rules of the free market. Reich continues to cite other rules present in the free market in order to achieve growth, efficiency, and fairness. His ultimate answer to the question of who creates the rules that govern the free market is that the power lies in the wealthy that pay off politicians, regulatory heads, and courts. However, Reich does propose a solution to this issue. Politicians, along with other national leaders, both present and future, must work towards expressing their opinions as delegates of the American society rather than money-influenced heralds. With citizens exerting their power to elect only the fittest leaders, this goal can be reached. The solution lies in the hands of the voters to put politicians in place that will set the framework of rules for the market to grow equally for all classes of society to reduce the skewed distribution of wealth.
Toggle Commented Sep 19, 2013 on Link from Twitter econ 102 at Jolly Green General
Krugman raises an extremely important argument in this article. Economists analyze economic and fiscal issues by focusing on the whole picture. Rather than concentrating on the short term results that can be achieved by the austerity policies implemented by various politicians, economists look towards the long run. By employing austerity policies, the economy is, in essence, taking three steps backward and, in exchange, only one step forward. The true results are seen in the long run and the economy remains in poor condition. Krugman also discusses an equally important issue: the duty of citizens to understand national issues. As voters, citizens must take the time to understand the issues at hand. Instead of blindly listening to politicians persuade their views over the masses to ensure reelection, the masses must educate themselves on the issues and make an informed decisions when supporting politicians and national leaders in their endeavors.
Toggle Commented Sep 12, 2013 on Your Textbook Author.... at Jolly Green General
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Sep 11, 2013