There are Free Lunches Statement of Intentions

There are Free Lunches: Behavioral Clues to Live Happy in the Economic World is a blog that intends to present updated and relevant information about the "hidden" and only recently uncovered dimensions of the economic science: the behavioral factors. With this blog we intend to promote in Europe and in the rest of the World, the top research articles and perspectives on behavioral economics, decision making, consumer behavior, and general behavioral science. We aim to be followed by journalists, academics, managers, civil servants, and everyone who wishes to improve their daily interaction with the economic world and consequently, their lives' happiness.

Wednesday, 28 March 2012

CO2 #3 Global Climate Change Will Increase Anxiety, Fear and Depression (via NWF)

New Study Details Psychological Impacts of Climate Change

The impact of global climate change on Americans’ mental health has been largely ignored, even though the incidence of mental and social disorders will rise steeply if climate change is not curtailed, adding significant costs to the already $317 billion in annual mental health care expenditures and lost productivity in the U.S., concludes a major new study. “The greatest public costs could come from ignoring the effects,” the report concludes.

Because extreme weather events and disasters will be more severe and more frequent, the U. S. will see a rise in illnesses like depressive and anxiety disorders, post-traumatic stress, substance abuse, suicide and violence.

The Psychological Effects of Global Warming on the United States and Why the U.S. Mental Health Care System Is Not Adequately Prepared, authored by Kevin J. Coyle, JD, and Lise Van Susteren, MD, is the report of a March 2009 forum of health, and science and academic leaders from around the country.

Read more about the psychological effects of climate change: ClimateChange

CO2 #2 Creatures of Habit (via BigThink)

“So here’s the thing to recognize about your bad habit. You cannot eradicate your bad habit. If you just try and say, ‘ I’m going to use willpower to make this behavior go away,’ it’s not going to work. And we know this from study after study. Every scientist who works on habits will tell you, once the neurology of that habit is set; it’s always there in some form or another.”

– Charles Duhigg, author of The Power of Habit: Why We do What We do in Life and Business.

You can watch an author of the book video here: CreaturesHabit

CO2 #1 Cuing Consumerism: Situational Materialism Undermines Personal and Social Well-Being (via Psychological Science)

Correlational evidence indicates that materialistic individuals experience relatively low levels of well-being. Across four experiments, we found that situational cuing can also trigger materialistic mind-sets, with similarly negative personal and social consequences. Merely viewing desirable consumer goods resulted in increases in materialistic concerns and led to heightened negative affect and reduced social involvement (Experiment 1). Framing a computer task as a “Consumer Reaction Study” led to a stronger automatic bias toward values reflecting self-enhancement, compared with framing the same task as a “Citizen Reaction Study” (Experiment 2). Consumer cues also increased competitiveness (Experiment 3) and selfishness in a water-conservation dilemma (Experiment 4). Thus, the costs of materialism are not localized only in particularly materialistic people, but can also be found in individuals who happen to be exposed to environmental cues that activate consumerism—cues that are commonplace in contemporary society.

Link to the (paid) article? here it is: Consumerism

Sunday, 25 March 2012

O2 #3 Behavioural economics: the Kylie Minogue of market research (via Knowing and Making)

Do you remember those catchy tunes from the late 1980s? I Should Be So Lucky? The Locomotion?

The first time you heard them they were quite fun, memorable even. But then they got more airplay. And more. And more. Radio stations figured out that the sugary, bubbly popness of the tunes would cut through a lot of background noise and get your attention, so they played them again and again. Soon we had Got To Be Certain, and Je Ne Sais Pas Pourquoi, which were exactly the same as the first two songs. Then a "strategic inter-agency collaboration" with Jason Donovan on Especially For You. (Jason looks a bit less lifelike in this alternative version).

After a short interlude in late 1989, another number 1 with Tears On My Pillow, which was meant to be more sophisticated but was equally artificial, overproduced and in fact just the same old song as I Should Be So Lucky. By this time anyone who wasn't a 13-year-old girl was thoroughly sick of Miss Minogue, who wasn't even on Neighbours any more. Interest and record sales rapidly declined, and thankfully Nirvana showed up to distract us.

On a completely unrelated subject, do you remember those talks about behavioural economics that infected the market research industry in 2009? Someone had read Nudge, and someone else got a copy of Predictably Irrational. It's quite easy to write a behavioural economics talk - you just claim that everyone else in the world thinks people are irrational, but you have spotted (with the help of Daniel Kahneman perhaps) that they're not. Read out a list of cognitive biases - anchoring, hyperbolic discounting, social norms. Show some slides with illustrated examples of each bias. If you're brave, test one of them on your audience and hope they haven't yet been to enough identical talks to see through your ultimatum game or your auction. I am just as guilty of this as anyone else.

Read the rest of this amusing article here: KylieMinogue

O2 #2 Barclays Wealth launches behavioural finance microsite (via Investment Europe)

Understanding behavioural finance is at the heart of a new microsite launched by Barclays Wealth, which provides research, blogs and videos.

The site delves into questions such as: Are you confident or overconfident? Are you missing the wood for the trees? and Financial personality - what's yours?

Introducing the site, Greg Davies, head of Behavioural & Quantitative Investment Philosophy at Barclays Wealth, said that market volatility understandibly made investors hesitant about investing in risk assets.

"However, it's not just about the risk of being in the market. Investors also need to think about the risk of being out, or selling at the bottom. Learning about your financial personality and how to control your emotional response to volatile markets can help investors take advantage of an anxiety premium."

The new microsite is meant to enable investors to access latest thinking in behavioural finance and understand how emotion drives investment decisions.

To access the site click here: Barclays

O2 #1 No, we are not selfish – co-operation is at the heart of our existence (via The Guardian)

Far from being quaint and anachronistic, collaboration and co-operation underpin our most innovative activities

We are born selfish. Self-interest is the actuating force for economic activity. Without the rules and laws, sanctions and taxes of the state, we would descend into a war of all against all. Evolutionary science and political economy – from Adam Smith and Thomas Hobbes, to Milton Friedman and Richard Dawkins – tell us selfishness is our default mode.

What if they were completely wrong? Science increasingly suggests they are.

Evidence from evolutionary biology and psychology, anthropology and game theory shows our uniquely sophisticated capacity for co-operation is at the heart of our evolutionary success. Science is telling us we are co-operators.

We breed babies that develop slowly and need a lot of care. According to Sarah Blaffer Hrdy, professor of anthropology at the University of California, mothers in hunter-gatherer tribes needed help, especially from older women, to cope with child-rearing and to supplement the food brought back by hunters. The babies most likely to survive would have been good at eliciting support, showing pro-social tendencies and emotions.

For most of human history the only sure way to get food on a regular basis was to be co-operative: if a hunter returned with nothing they would rely on sharing food brought in by other more successful band members. Richard Wrangham, professor of biological anthropology at Harvard, argues that we evolved large brains because our ancestors worked out how to cook food to make it more digestible and so to provide more energy. Hunting, cooking and eating together required tolerant temperaments and skills of co-operation.

Go here if you want to read Charles Leadbeater complete article: Co-operation

Thursday, 22 March 2012

CO2 #3 Philip Mirowski - Why Is There a Nobel Memorial Prize in Economics? (via YouTube)

The Nobel Memorial Prize defines high achievement in economics, and it validates the discipline's claim for scientific authority. And yet, historically, it can be understood as a reflection of domestic policy conflicts in Sweden. This, Philip Mirowski would say, is but one example of the multifaceted nature of history. He and his team investigate how the Bank of Sweden's goal of political independence wound up elevating the status of neoclassical thinking within the economics profession. Writing the history of the Nobel Memorial Prize to tease out the influence of economic doctrines on policy norms in recent decades -- this is new economic thinking.

Go here for this revealing talk with economist Philip Mirowski: NobelEconomics

CO2 #2 Greed Prevents Good (via New York Times)

In 1986, Ivan Boesky spoke here at our university and proclaimed “greed is healthy.” Lore has it that Boesky and this speech inspired the Gordon Gekko character in Oliver Stone’s “Wall Street,” and the “Greed is … good” speech. Now, some 25 years later, seven studies we conducted, some on this same campus, have proved the opposite, that greed, far from being good, undermines moral behavior.

In this research we looked at the ethical conduct among society’s haves and have-nots. In one study we found that wealthier subjects cheated more. After five apparently random rolls of a computer die for a chance to win some cash, wealthier participants were more likely to report scores higher than 12 — even though the game was rigged so that scores higher than 12 were impossible. When we positioned assistants at four-way traffic stops and pedestrian zones, wealthy drivers in high-priced cars were more likely to cut off other drivers or ignore pedestrians. In still other studies, the wealthy were more likely to lie in negotiations and endorse unethical behavior at work, like deceiving clients for profit. Wealthier subjects even took more candy from a jar that was ostensibly for children.

What to know more about greed? Go here to the NYT debate: GreedGood

CO2 #1 CO2 makes you fat? (via ScienceNordic)

Danish researchers have announced a rather wild hypothesis: Perhaps we are getting fatter and fatter because of the increasing CO2 levels in the atmosphere.

Mad as it may sound, Danish researchers have announced a theory that may not only explain why people all over the world are getting fatter and fatter, but also warn of the serious consequences for life on Earth of continued pollution of the atmosphere by CO2 emissions.

In itself, the theory is quite simple: CO2 contributes to making us fat.

If you want a very complete description of this great piece of research, please go here: CO2&FAT

Monday, 19 March 2012

O2 #3 When Does Learning Begin? (via BigThink)

In a recent interview, the United States’ foremost educational historian Diane Ravitch told Big Think what really matters when it comes to learning, inside schools and out. Contrary to conventional wisdom, she says, it's not K-12 teachers who are most responsible for kids' progress -- ages 0-5 are some of the most developmentally important, with continued resonance throughout one's entire life.

Here is the 2:52 video: AgeLearning

O2 #2 Facebook: The Psychology of Social Media? (via Psychology Today)

Wherever you get your news, from television, print media or the Internet, there are lots of stories about how ‘social media' is changing our behavior as consumers. The leader in this media segment is Facebook.

A unique characteristic of consumer behavior on Facebook is ‘liking' a page by clicking on the thumbs-up symbol. Of those who visit Facebook, 43% have ‘liked' a page posted by a brand or company. This has become commonplace consumer behavior. Consider that Coca-Cola has 39 million ‘likes,' Disney 33 million, and Starbucks has 28 million.

But what does it mean to ‘like' a brand on Facebook? What motivates consumers to click on the ‘like' icon? And why is this important to the brand marketers?

Want to know more? Go to Peter Noel Murray blog at Psychology Today: PsySocialMedia

O2 #1 Irrationality is the real invisible hand (via DanAriely)

Adam Smith first coined the term “The Invisible Hand” in his important book “The Wealth of Nations.” With this term he was trying to capture the idea that the marketplace would be self-regulating. The basic principle of the invisible hand is that though we may be unaware of it, an unseen hand is constantly prodding us along to act in line with what’s best for the whole economy. This means that when this invisible hand exists, when we all pursue our own interest, we end up promoting the public good, and often more effectively than if we had actually and directly intended to do so. This is a beautiful idea, but the question of course is how closely it represents reality.

If you to read the rest of the article about this issue, also approached by TFL@PT, here is the link: IrrationalityInvisibleHand

Thursday, 15 March 2012

CO2 #3 Goldman Sachs director quits 'morally bankrupt' Wall Street bank (via The Guardian)

Greg Smith resigns as executive director of Goldman's European equity derivatives business after devastating attack

Wall Street bank Goldman Sachs has suffered a severe blow to its reputation after one of its bankers announced his resignation in the New York Times by declaring his employer "morally bankrupt".

Questions were immediately raised about the relationship between the firm and its clients – whom the departing employee, Greg Smith, said were described as "muppets" by his superiors.

Smith, who was based in London, made a savage attack on the culture of Goldman, which only two years ago was damaged by another London-based banker, Fabrice Tourre, who described creating "Frankenstein" products that showed scant regard for the needs of the firm's clients

Read about this revealing news about the investment banking bulwark: GoldmanSachs

CO2 #2 Dear Economists – please throw new light on money (via Jem Bendell)

Dear Economists

It has come to my attention that you’ve taken a battering in the last few years. Apart from a handful of you, the massive failure to predict the financial crisis, and the peddling of tried-and-failed theories of how to get out of said crisis, seems to have diminished your profession’s standing. Some politicians are even listening to sociologists, who say you have have nothing useful to offer on systems for achieving greater well-being, rather than mere economic growth. Perhaps rather unkindly, some now wonder whether your assumptions about self-interest have been a severe case of projection.

I don’t like to see anyone in such a bind. Especially when I sense there is major opportunity for a turn around in your fortunes. Although I’m one of your poor-cousins (i.e. a sociologist), for the past couple of years I’ve been reading some economics, mostly on monetary systems, and mostly by those I think you call “heterodox economists.” As an active reader, I jotted down some questions that I wanted answering. As I read on, it seemed that these questions were not yet answered! I looked everywhere (well, at least not just on wikipedia) and could not find data on them. So if you work on the following questions, not only could your answers become seminal, secure yourself tenure, you might even gain a spot in the next ‘Inside Job’ movie! I hope you read on and come back with peer-reviewed articles in the coming years.

If you want to know these interesting questions, go for it: LetterEconomist

CO2 #1 James Hansen: Why I must speak out about climate change (via Simoleon Sense)

Top climate scientist James Hansen tells the story of his involvement in the science of and debate over global climate change. In doing so he outlines the overwhelming evidence that change is happening and why that makes him deeply worried about the future.

James Hansen has made key insights into our global climate -- and inspired a generation of activists and scientists.

Whatch this TED talk about a TOP threat with a TOP scientist here: HansenClimate

Monday, 12 March 2012

O2 #2 Women, Thinking About Relocating? (via Freakonomics)

In honor of International Women’s Day, Foreign Policy has a roundup of five surprisingly good places to be a woman. The Philippines, Spain, South Africa/Lesotho, Latvia, and Cuba all make their list.

While it may be hard to believe that women fare well in the very same country that hosted a “Blonde Weekend” back in 2009, Latvian women are excelling professionally: “As of 2010, women constituted 71 percent of the Baltic state’s university graduates, 50 percent of its Supreme Court judges, and 45 percent of those employed in its research and development sector. Latvia’s first female president, Vaira Vike-Freiberga, oversaw Latvia’s entrance into the European Union in 2004.”

If you want to read this interesting article about the 5 best places to be a woman, go for it: 5PlacesWoman

O2 #1 Nobel laureate Daniel Kahneman on his book 'Thinking, Fast and Slow' (via CharlieRose)

You just have to go here, to watch this beautiful interview (27:39) with Mr. Kahneman, the Capitalism Rational Myth destroyer: KahnemanFastSlow

TFL @ PsycToday: Consequences of Learning Economics

If you want to know more about "How does learning economics influences the way we behave?", you can check the post here: LearningEconomics

Thursday, 8 March 2012

CO2 #3 Is Your Language Making You Broke and Fat? (via Psychology Today)

Keith Chen, an economist from Yale, makes a startling claim in an unpublished working paper: People's fiscal responsibility and healthy lifestyle choices depend in part on the grammar of their language.

Here's the idea: Languages differ in the devices they offer to speakers who want to talk about the future. For some, like Spanish and Greek, you have to tack on a verb ending that clearly marks future time—so, in Spanish, you would say escribo for the present tense (I write or I'm writing) and escribiré for the future tense (I will write). But other languages, like Mandarin, don't require that their verbs be escorted by grammatical markers that convey future time—time is usually obvious from something else in the context. In Mandarin, you would say the equivalent of I write tomorrow, using the same verb form for both present and future.

To see how economists are broadening their method: LanguageBrokeFat

CO2 #2 Paul Gilding: The Earth is full (via SimoleonSense)

Have we used up all our resources? Have we filled up all the livable space on Earth? Paul Gilding suggests we have, and the possibility of devastating consequences, in a talk that's equal parts terrifying and, oddly, hopeful.

Chwck this amazing TED talk abou the future of the Earth: EarthFull

CO2 #1 Are rich people more unethical? (via CNN)

Since the economic implosion of 2008, the news has been littered with accounts of questionable behavior in boardrooms, corner offices, and other gold-plated spaces. What's not clear from the headlines, however, is whether white-collar criminals like Bernard Madoff are bad apples or extreme examples of a widespread trend.

A new study may offer a clue to answering that question: A series of experiments conducted by psychologists at the University of California, Berkeley, suggests that people who are socially and financially better-off are more likely to lie, cheat, and otherwise behave unethically compared to individuals who occupy lower rungs of the socioeconomic ladder.

"Elevated wealth status seems to make you want even more, and that increased want leads you to bend the rules or break the rules to serve your self-interest," says Paul Piff, the lead author of the study and a doctoral candidate in psychology at the university.

Chech this study, which is creating waves in the academic world: RichUnethical

Sunday, 4 March 2012

O2 #3 Rules of thumb for losing weight (via Decision Sciences)

9 Simple rules for dieting, check them here: 9rules

O2 #2 Have You Been Nudged Today? (via The Psy-Fi Blog)

The British Civil Service is not a body known for radical change; it’s never quite got over having to give up the quill pen and tends to view with suspicion newfangled ideas like computers and women in the workplace. Despite this it’s currently at the heart of a large scale experiment on the use of techniques from behavioral science, aka, “nudge” theory.

Sitting at the center of UK government is the Behavioural Insights Team (BIT), which is tasked with using behavioral approaches “as an alternative or complement to regulation or bans”, while achieving a ten-fold return on the cost of the team. They’ve just released the results of their first set of trials on fraud, error and debt, and these suggest they’re likely to continue, as the potential savings look like they’ll be quite significant. Wherever you are, you can expect to be nudged, prodded and cajoled into being a better person; or at least one that pays their taxes and turns up to doctors' appointments on time.

Check this interesting artcle about BE application in the UK: NudgeUK

O2 #1 Women And Collective Intelligence Will Solve Our Planetary Crises (via Fastcoexist)

The folks in charge don’t seem to be making much of a dent. Could the way women approach problems be better suited for the complicated and interconnected problems we face?

Sustainability is a so-called wicked problem. It is complex, difficult to define, impossible to solve in a linear fashion and the aspects of the problem are so interrelated that it is impossible to consider (and therefore impossible to model) all of the unintended consequences that might accompany any single “solution.”

Check this interesting perspective about feminine wisdom: WomenPlanetaryCrises

Thursday, 1 March 2012

CO2 #3 Looming Integrity Crisis (via Dan Ariely)

Apparently, Britons are becoming less honest. At least according to a recent study conducted at the University of Essex, where several thousand respondents filled out an online survey that repeated questions from a study on citizenship and behavior conducted in 2000. According to researcher Paul Whiteley, the purpose of the study was to try to gain an idea of the level of dishonesty in British society, and moreover, what’s considered acceptable and whether that has altered over time.

If you want to know more about this sudy, from Essex University: BritHonesty

CO2 #2 Competitiveness is about capital much more than labor (via SimoleonSense)

Rather than lazy Mediterraneans demanding high pay for little output, what has happened since 1980 is a convergence to prudent German norms. Workers in Southern europe are now paid roughly the same amount per unit of goods produced as their counterparts in Mitteleuropa. This is macroeconomics, so the meaning of a “unit of goods produced” is a fuzzy and contestable. But to the degree that unit labor cost statistics capture what they claim to capture, what they tell us is that European workers, North and South, have come to earn roughly equal pay for equal product.

Southern European workers do earn less overall, simply because they produce fewer or lower-value goods and services than their Northern neighbors. Unit labor costs are not the problem at all: it is the scale of aggregate output. And what determines the scale of aggregate output? Is it the laziness of workers? No, of course not. We all know that when residents of poor countries emigrate to rich ones, the same weak bodies and flawed characters that produce very little at home suddenly explode into economic vigor. The difference is “capital depth”, broadly construed to include all the physical equipment, business organization, public infrastructure, and governance that collude to enable two small hands and a broken mind to accomplish outsize things. Workers’ pay level is not the problem in Southern Europe. It is deficiencies in the arrangement of capital, again broadly construed, that have left Greece and Spain unable to produce value in sufficient quantity to compete with their neighbors.

If you want to see impressive evidence, and get rid of a prejudice: BigLie

CO2 #1 Depression Is Linked to Hyperconnectivity of Brain Regions, a New Study Shows (via TheDailyBeast)

A study published today in PLoS provides surprising new insight into what happens in depressed brains.

In people with depression, brain regions appear to be overly connected to one another, says the study, which comes out of UCLA’s Semel Institute for Neuroscience and Human Behavior. In turn, this excessive connectivity reduces the flexibility the brain needs to function properly.

“Depression is a whole brain disease,” says Dr. Andrew Leuchter, the Semel Institute neuroscientist who led the team that produced the study. “It’s not something that affects just one brain region, but that the entire organ doesn’t appear to be functioning very well.”

If you want to know about this breakthrough study: DepressionBrainHyperconnectivity