Recession Psychology
In the May edition of New York Magazine, Jennifer Senior wrote that Kathleen Vohs, a consumer psychologist at the University of Minnesota’s Carlson School of Management, is preeminent among them, and for the sake of better understanding both the past and the future of our city, it’s useful to start by looking at what she’s found. Just thinking about money made her subjects less likely to help strangers struggling with their belongings. Just handling money made her subjects less sensitive to physical pain. My favorite experiment of hers, though, was one in which she divided her subjects into groups, one of which

Dollar Store = Credit Limit Decrease
Computer Scientist Panos Ipeirotis writes that An interesting example of a company deriving policy based on their predictive model is American Express. They realized that the feature “customer buys in a 99c store” is correlated with higher delinquency rates. So, AmEx decided to decrease the credit limit for such customers. Of course, the result will be that potentially affected customers will stop visiting such stores, decreasing the value of this policy for AmEx. Furthermore, this action may cause even mo

Benefits of Tort Law
The New York Times reports today that the Walt Disney Company is now offering refunds for all those “Baby Einstein” videos that did not make children into geniuses. . . Baby Einstein, founded in 1997, was one of the earliest players in what became a huge electronic media market for babies and toddlers. Acquired by Disney in 2001, the company expanded to a full line of books, toys, flashcards and apparel, along with DVDs including “Baby Mozart,” “Baby Shakespeare” and “Baby Galileo.” The videos — simple productions featuring music, puppets, bright colors, and not many words — became a staple of baby life: According to a 2003 study, a th

Experiments, Social Science, and Development
The following is a link to the findings of the “Poverty Action Lab,” a U.N. program intended to discover the most efficient methods of reducing poverty. It is an example of how the tools of economics can succeed where the best of intentions can fail. http://povertyactionlab.org/MDG/ More specifically, the program demonstrates the usefulness of experimental methods in social science. On a related note, the most recent issue of Science has an article titled “Lab Experiments Are a Major Source of Knowledge in the Social Sciences” bu Falk and Heckman:

The Evolutionary Adaptedness of False Beliefs
McKay and Dennett (2009) explore the potential evolutionary benefits of believing falsehoods: From an evolutionary standpoint, a default presumption is that true beliefs are adaptive and misbeliefs maladaptive. But if humans are biologically engineered to appraise the world accurately and to form true beliefs, how are we to explain the routine exceptions to this rule? How can we account for mistaken beliefs, bizarre delusions and instances of self-deception? We explore this question in some detail. We begin by articulating a distinction between two general types of misbelief: those resulting from a