infonet-economy

Rewards in real life are rarely received without incurring costs and successful reward harvesting often involves weighing and minimizing different types of costs. In the natural environment, such costs often include the physical effort required to obtain rewards and potential risks attached to them. Costs may also include potential risks. In this study, we applied fMRI to explore the neural coding of physical effort costs as opposed to costs associated with risky rewards. Using an incentive-compatible valuation mechanism, we separately measured the subjective costs associated with effortful and risky options. As expected, subjective costs of options increased with both increasing effort and increasing risk. Despite the similar nature of behavioral discounting of effort and risk, distinct regions of the brain coded these two cost types separately, with anterior insula primarily processing risk costs and midcingulate and supplementary motor area (SMA) processing effort costs. To investigate integration of the two cost types, we also presented participants with options that combined effortful and risky elements. We found that the frontal pole integrates effort and risk costs through functional coupling with the SMA and insula. The degree to which the latter two regions influenced frontal pole activity correlated with participant-specific behavioral sensitivity to effort and risk costs. These data support the notion that, although physical effort costs may appear to be behaviorally similar to other types of costs, such as risk, they are treated separately at the neural level and are integrated only if there is a need to do so.

Using data on young men from the National Education Longitudinal Survey, this paperinvestigates the relationship between childhood misbehavior and later education and labor marketoutcomes. The main finding is that eighth-grade misbehavior is important for earnings overand above eighth-grade test scores. Moreover, controlling for educational attainment, childhoodmisbehavior is associated with earnings at all educational levels, whereas achievement test scoresare related to earnings only for young men with postsecondary degrees. Possible explanations forthe association between eighth-grade misbehavior and economic success are explored.

Affirmative action is often criticized for causing reverse discrimination and lowering thequalifications of those hired under the policy. However the magnitude of such adverse effectsdepends on whether the best suited candidate is hired absent the policy. Indeed affirmative actionmay compensate for the distortion discrimination imposes on the selection of candidates. Thispaper asks whether affirmative action can have a similar corrective impact when qualifiedindividuals fail to apply for a job. We evaluate the effect of introducing a gender quota in anenvironment where high performing women fail to enter competitions they can win. We showthat guaranteeing women equal representation among winners increases their entry. The responseexceeds that predicted by the change in probability of winning, and is in part driven by womenbeing more willing to compete against other women. The consequences are substantial as theboost in supply essentially eliminates the anticipated costs of the policy.

As the recipients of the 2012 science Nobel prizes gather in Stockholm to celebrate and be celebrated, News & Views shares some expert opinions on the achievements honoured.

Background

Decisions under risk and with outcomes that are delayed in time are ubiquitous in real life and can have a significant impact on the health and wealth of the decision-maker. Despite its potential relevance for real-world choices, the degree of aberrant risky and intertemporal decision-making in patients suffering from major depressive disorder (MDD) and posttraumatic stress disorder (PTSD) has received little attention to date.

Method

We used a case-control design to compare decision-making in healthy control subjects (N=16) versus untreated depressed subjects in a current major depressive episode (N=20). In order to examine how major depressive disorder (MDD) may impact decision-making, subjects made decisions over (1) risky outcomes and (2) delayed outcomes in the domain of gains and losses using choice paradigms from neuroeconomics. In a pre-planned analysis, depressed subjects were subdivided into those with primary PTSD along with comorbid MDD (MDD+PTSD) versus those with primary MDD without PTSD (MDD-only). Choice behavior was modeled via a standard econometric model of intertemporal choice, a quasi-hyperbolic temporal discounting function, which was estimated for each subject group separately.

Results

Under conditions of potential gain, depressed subjects demonstrated greater discounting for gains across all time frames compared to controls. In the realm of losses, both subgroups of depressed subjects discounted more steeply than controls for short time frames. However, for delayed losses ranging from >1-10 years, MDD+PTSD subjects showed shallower discounting rates relative to MDD-only subjects, who continued to discount future losses steeply. Risk attitudes did not contribute to differences in intertemporal choice.

Conclusions

Depressed patients make choices that minimize current pain and maximize current reward, despite severe later consequences or lost opportunities. Anxiety associated with PTSD may serve as a partially protective factor in decision-making about long-term potential losses compared to MDD patients without PTSD.