an experimental examination of labor supply and work intensities estimated negative substitution effects on work hours question the empirical validity of the classical labor supply model estimates are reconciled by allowing a dual choice of hours and effort for piecerate workers in such a model these negative substitution effects result from substituting on and off the job leisure we test our model using controlled experimentation on human subjects these experiments while not naturally occurring environments represent real economic choices and can generate data unavailable elsewhere e g effort data the results support our model and they have implications both for labor management and for empirical research focusing only on the hours choice the classical static model of the labor leisure choice offers positive compensated wage effects on hours of work as its main testable implication previous attempts to test this hypothesis with field data have cast doubt on the empirical validity of the static labor supply model due to the frequency of negative estimated compensated wage elasticities a limitation of the model is that it views the choice of hours of work as the only

asymmetric effects of favorable and unfavorable information on decision making under ambiguity most daily decisions involve uncertainty about outcome probabilities arising from incomplete knowledge i e ambiguity we explore how the addition of partial information affects these types of choices using theoretical and empirical methods our experiments in both gain and loss domains demonstrate that when such information supports a favorable outcome it strongly increases valuation of an ambiguous financial prospect however when information supports an unfavorable outcome it has significantly less impact we find that two mechanisms drive this asymmetry first unfavorable information decreases estimates of a good outcome occurring but also reduces aversive uncertainty these factors act in opposition minimizing the effects of unfavorable information second when information can be subjectively interpreted unfavorable information is less likely to be integrated into evaluations our findings reveal mechanisms not captured by traditional models of decision making under uncertainty and highlight

happiness and productivity some firms say they care about the well being and happiness of their employees but are such claims hype or scientific good sense we provide evidence for a classic piece rate setting that happ

step by step computation of corrected asymptotic variance covariance matrices of two stage estimators in a simultaneous equations model with a mixture of four continuous and binary dependent variables abstractthe current study presents easily computable formulas for asymptotic variance covariance matrices of the two stage estimators in a simultaneous equation model with a mixture of four continuous and binary dependent variables for the sake of econometrics practitioners the study uses an illustrative example from the current literature and demonstrates step by step computation of these variance covariance matrices by using the matrix routine of a popular econometric software

fear anger and credit on bank robberies and loan conditions we study the impact of emotions on real world decisions made by loan officers by analyzing the loan conditions of loans granted immediately after a bank branch robbery we find significant differences in conditions of the loans granted after a robbery compared to changes in loan conditions that occur contemporaneously at unaffected branches in general loan officers seem to adopt so called avoidance behaviour in accordance with the literature on posttraumatic stress their avoidance behavior is halved within two weeks after the robbery and the effect further varies depending on the presence of a firearm during the robbery

recover overnight work interruption and worker productivity this paper investigates the effect of work interruption on workers subsequent productivity we employ a data set of individual productivity and machine conditions in which each worker faces the chance on a daily basis that her machine will break down randomly our analysis finds that compared to a workday with smooth production experiencing a machine breakdown is associated with a 3 3 percentage point decline in the worker s productivity the following day we discuss possible explanations for the observed effect including negative emotions increased cautiousness in operating the machine and proficiency loss our findings shed light on the importance of understanding and managing interruptions in the workplace and contribute to a growing literature on the determinants of productivity at the micro level data and the online appendix are available at https doi org 10 1287 mnsc 2017 2792 this paper was accepted by john list behavioral economics

do women shy away from competition do men compete too much we examine whether men and women of the same ability differ in their selection into a competitive environment participants in a laboratory experiment solve a real task first under a noncompetitive piece rate and then a competitive tournament incentive scheme although there are no gender differences in performance men select the tournament twice as much as women when choosing their compensation scheme for the next performance while 73 percent of the men select the tournament only 35 percent of the women make this choice this gender gap in tournament entry is not explained by performance and factors such as risk and feedback aversion only playa negligible role instead the tournament entry gap is driven by men being more overconfident and by gender differences in preferences for performing in a competition the result is that women shy away from competition and men embrace it

are wages habit forming evidence from micro data although utility functions play a central role in economics the axiom that utility depends only on the absolute levels of its arguments is rarely tested this paper uses panel data on 2000 british employees who remain with the same employer and who are not promoted from one wave to the next it is shown that one important measure of well being overall job satisfaction is strongly positively correlated with the change in the worker s pay between waves but is unrelated to the current level of pay empirical tests suggest that a reference dependent satisfaction function where individual well being depends on current pay relative to past pay is more consistent with these regression results than are productivity or agency explanations of increasing wage profiles some evidence is presented of greater job satisfaction effects of pay rises for lower paid less well educated and younger workers these results provide some micro evidence consistent with the theory widespread in social science of habituation individuals may become used to any given level of consumption or income as such they tie in with the finding that a country s well being as measured by the average happiness of its citizens is only weakly correlated with its per capita gnp

when information dominates comparison abstract we propose a micro econometric evaluation of the relation between life satisfaction and income distribution using a balanced panel survey of the russian population russian longitudinal monitoring survey rlms running from 1994 to 2000 covering 4685 individuals we show that in the context of the very volatile russian environment hirschman s q j econ 87 1973 544 tunnel effect conjecture seems to be confirmed variables reflecting income distribution do not influence satisfaction through social comparisons individuals rather seem to use their informational content in order to form their expectations the reference group s income thereby exerts a positive influence on individual satisfaction which contrasts with other studies on the subject inequality indices do not affect individual welfare

are you happy while you work using a new data source permitting individuals to record their well being via a smartphone we explore within person variance in individuals well being measured momentarily at random points in time we find paid work is ranked lower than any of the other 39 activities individuals can report engaging in with the exception of being sick in bed precisely how unhappy one is while working varies significantly with where you work whether you are combining work with other activities whether you are alone or with others and the time of day or night you are working

wage and employment structure in an economy with internal labor markets the paper discusses the economics of promotion and in particular studies wage and employment structure in an economy with internal labor markets it is shown under a wide range of assumptions that firms will set a nondecreasing wage profile that for reasons apparently not suggested before both junior and senior workers may be paid more or less than their marginal product and that firms will offer a flat wage schedule if labor hours are supplied perfectly inelastically

a puzzle for adaptive theory abstract over the life cycle aspirations for material goods grow commensurately with consumer wealth but aspirations for marriage and the number and quality of children do not change much the puzzle is why there is this difference between life domains in the extent to which aspirations adapt to actual circumstances the findings come from a cohort analysis of 1978 and 1994 survey responses on the good life

local happiness and firm behavior do firms in happy places invest more abstract we examine a previously unexplored relationship between local happiness and firm investment we looked at investment in general and r d intensity in particular as the relatively intangible nature of the latter may make it more subject to the effects of sentiment and affect we find that average local happiness is positively correlated with both r d intensity and firm investment after controlling for firm and local area characteristics this positive relationship may be due to the optimism and longer term perspectives that are typically associated with higher levels of life satisfaction happiness we also look at inequality in happiness levels and find that the effect of local happiness is stronger in places with more equal happiness distributions younger firms investment behavior is also more strongly correlated with local happiness levels the results remain robust to a battery of robustness tests including the use of residual and hedonic measures of happiness analysis of a sample of relocated firms and a test for reverse causality

management economics in a large retail company we use unique data from 245 stores of a uk retailer to study links among middle store manager skills sales and manager pay we find that of the six management practice areas surveyed the most important is commercial awareness where abler managers achieve up to 13 9 higher sales per worker we find that many stores have poor managers on this indicator however the company is careful to incentivize managers operating a scheme giving shares approximately 20 in both positive and negative deviations of actual sales from expected abler managers do not receive higher pay implying that their skills are company specific

voluntary activities and daily happiness in the united states this article analyzes differences in daily happiness between those individuals in the united states who perform voluntary activities during the day and those who do not using the well being module of the american time use survey 2010 we find that those who devote any time to voluntary activities during the day report higher levels of daily happiness than those who do not comparing the happiness obtained from a range of activities we find that volunteering is among the most enjoyable indicating that time spent on voluntary activities is utility enhancing we document that the effect of voluntary activities on the experienced utility of individuals can be decomposed into a time composition effect and an activity effect with the latter explaining between 11 and 46 of the observed difference jel d13 j16 j22

comment on regulations market structure institutions and the cost of financial intermediation regulations market structure institutions and the cost of financial intermediation by demirguc kunt laeven and levine 2004 this issue of jmcb offers another piece to a larger puzzle constructed over the past ten years linking finance to economic performance starting with king and levine 1993 over the past ten years an impressive array of facts has been assembled supporting the proposition that the size and efficiency of financial markets and institutions can have a causal impact on long run growth we now know for example that predetermined measures of financial market depth predict future growth that industrial sectors relying heavily on external sources for cash to support investment benefit more from good finance than industries that rely on internally generated funds rajan and zingales 1998 and that financial liberalizations seem to be followed by faster growth jayaratne and strahan 1996 bekaert harvey and lundblad 2003 the key challenge for this research has been to overcome the possibility that causality flows from the performance of the economy to the financial system rather than the other way around if financial resources seek the highest return then we would expect a strong correlation between finance return on capital and economic growth where the economy leads finance follows the causality objection has been met by using timing by emphasizing differential effects of finance across sectors or by seeking plausibly exogenous policy or regulatory innovations any individual

surfeiting the appetite may sicken entrepreneurship and happiness do the presence and nature of entrepreneurship impact on national happiness and are nations with happy citizens better for entrepreneurs to start new businesses to provide tentative answers we survey the literature on entrepreneurship and subjective well being and use various data sources to uncover the first evidence of the relationship between entrepreneurship and happiness at the country level we find that opportunity motivated entrepreneurship may contribute to a nation s happiness but only to a certain point at which the effects of happiness begin to decline moreover our results suggest that a nation s happiness affects early stage opportunity driven entrepreneurial activity

happiness and time preference the effect of positive affect in a random assignment experiment abstract we conduct a random assignment experiment to investigate whether positive affect impacts time preference where time preference denotes a preference for present over future utility our result indicates that compared to neutral affect mild positive affect significantly reduces time preference over money this result is robust to various specification checks and alternative interpretations of the result are considered our result has implications for the effect of happiness on time preference and the role of emotions in economic decision making in general finally we reconfirm the ubiquity of time preference and start to explore its determinants djel d12 d83 i31

limited attention and income distribution economists have long been interested in the idea that there is a direct circular relation between poverty and low productivity and not just one that is mediated by market failures usually in asset markets the nutrition based efficiency wage model partha dasgupta and debraj ray 1987 is the canonical example of models where this happens however it has been variously suggested see for example t n srinivasan 1994 that the link from nutrition to productivity and especially the link from productivity to nutrition is too weak to be any more than a small part of the story partha dasgupta himself acknowledges this when he writes nutrition productivity construct provides a metaphor for an economic environment harboring poverty traps partha dasgupta 1997 page 5 we propose an alternative approach to this question based on the idea that attention is a scarce resource that is important for productivity specifically people may not be able to fully attend to their jobs if they are also worrying about problems at home and being distracted in this way reduces productivity but not paying attention at home is also costly early symptoms of a child s sickness may go unnoticed water may run out at the end of the day kerosene for lighting lamps at home might run out and make it hard to do homework etc finally the extent to which home life distracts depends on the nature of home life specifically certain goods e g a good baby sitter a 24 hour piped water supply a connection to a power supply grid can reduce the extent of home life distraction these three assumptions generate an interesting relation between income and productivity that is at the core of our model the non poor in this model by virtue of owning distraction saving goods and services at home are able to focus more on their work hence they will be more productive at work and will be able to afford more distraction saving goods this simple two way relationship between in this abstract was borrowed from another version of this item

confidence enhanced performance there is ample evidence that emotions affect performance positive emotions can improve performance while negative ones may diminish it for example the fears induced by the possibility of failure or of negative evaluations have physiological consequences shaking loss of concentration that may impair performance in sports on stage or at school there is also ample evidence that individuals have distorted recollection of past events and distorted attributions of the causes of successes of failures recollection of good events or successes is typically easier than recollection of bad ones or failures successes tend to be attributed to intrinsic aptitudes or own effort while failures are attributed to bad luck in addition these attributions are often reversed when judging the performance of others the objective of this paper is to incorporate the first phenomenon above into an otherwise standard decision theoretic model and show that in a world where performance depends on emotions biases in information processing enhance welfare

self confidence and personal motivation the maintenance and enhancement of self esteem has always been identified as a fundamental human impulse philosophers writers educators and of course psychologists have all emphasized the crucial role played by self image in motivation affect and social interactions the aim of this chapter is to bring these concerns into the realm of economic analysis and show that this has important implications for how agents process information and make decisions conversely the tools of economic modelling can help shed light on a number of apparently irrational behaviours documented by psychologists

sad or happy the effects of emotions on stated preferences for environmental goods a substantial literature in behavioural science and psychology shows that emotions affect human choices and values this paper investigates whether such emotional impacts are also present in stated choice experiments for environmental goods if this were so it would introduce an additional element of context dependence to the welfare measures derived from such methods and would be at odds with the rational choice model underlying welfare economics a laboratory experiment using three different emotion treatments was combined with a stated preference choice experiment concerned with changes in coastal water quality and fish populations in new zealand no statistically significant effects of changes in emotional state on estimated preference parameters willingness to pay or the randomness of choices were found the paper concludes by questioning why such a contrast exists with empirical findings in behavioural science

returns to job satisfaction in the presence of horizontal mismatch in this paper we study the relationship among horizontal mismatch job satisfaction and wages using data from the 2013 scientists and engineers statistical data system sestat estimates from 2sl