Contrary to prior research, and to our own expectations, we find that providing a belief distribution usually increases overconfidence, because doing so seems to reinforce people’s prior beliefs

Hu, B., & Simmons, J. P. (2022). Does constructing a belief distribution truly reduce overconfidence? Journal of Experimental Psychology: General. Sep 2022. https://doi.org/10.1037/xge0001291

Abstract: Can overconfidence be reduced by asking people to provide a belief distribution over all possible outcomes—that is, by asking them to indicate how likely all possible outcomes are? Although prior research suggests that the answer is “yes,” that research suffers from methodological confounds that muddle its interpretation. In our research, we remove these confounds to investigate whether providing a belief distribution truly reduces overconfidence. In 10 studies, participants made predictions about upcoming sports games or other participants’ preferences, and then indicated their confidence in these predictions using rating scales, likelihood judgments, and/or incentivized wagers. Contrary to prior research, and to our own expectations, we find that providing a belief distribution usually increases overconfidence, because doing so seems to reinforce people’s prior beliefs.

Policy Experimentation: While China’s bureaucratic and institutional conditions make policy experimentation at big scale possible, the complex political environments can also limit the scope and bias the direction of policy learning

Policy Experimentation in China: the Political Economy of Policy Learning. Shaoda Wang & David Y. Yang. NBER Working Paper 29402. October 2021. DOI 10.3386/w29402

Abstract: Many governments have engaged in policy experimentation in various forms to resolve uncertainty and facilitate learning. However, little is understood about the characteristics of policy experimentation, and how the structure of experimentation may affect policy learning and policy outcomes. We aim to describe and understand China’s policy experimentation since 1980, among the largest and most systematic in recent history. We collect comprehensive data on policy experimentation conducted in China over the past four decades. We find three main results. First, more than 80% of the experiments exhibit positive sample selection in terms of a locality’s economic development, and much of this can be attributed to misaligned incentives across political hierarchies. Second, local politicians allocate more resources to ensure the experiments’ success, and such effort is not replicable when policies roll out to the entire country. Third, the presence of sample selection and strategic effort is not fully accounted for by the central government, thus affecting policy learning and distorting national policies originating from the experimentation. Taken together, these results suggest that while China’s bureaucratic and institutional conditions make policy experimentation at such scale possible, the complex political environments can also limit the scope and bias the direction of policy learning.

Not as good as intented: Home buyers for whom the purchase of the home is a main reason for moving systematically overestimate the long-term satisfaction gain of living in their dwelling

Does the Dream of Home Ownership Rest Upon Biased Beliefs? A Test Based on Predicted and Realized Life Satisfaction. Reto Odermatt & Alois Stutzer. Journal of Happiness Studies, September 14 2022. https://rd.springer.com/article/10.1007/s10902-022-00571-w

Abstract: The belief that home ownership makes people happy is probably one of the most widespread intuitive theories of happiness. However, whether it is accurate is an open question. Based on individual panel data, we explore whether home buyers systematically overestimate the life satisfaction associated with moving to their privately owned property. To identify potential prediction errors, we compare people’s forecasts of their life satisfaction in 5 years’ time with their current realizations. We find that home buyers for whom the purchase of the home is a main reason for moving, on average, systematically overestimate the long-term satisfaction gain of living in their dwelling. The misprediction therein is driven by home buyers who follow extrinsically-oriented life goals, highlighting biased beliefs regarding own preferences as a relevant mechanism in the prediction errors.

Conclusions

This study explores whether home owners systematically overestimate the well-being derived from living in a privately owned house. For this, we jointly analyze people’s expectations regarding their future satisfaction and their actually experienced satisfaction with life later on. This allows us to study whether home buyers, on average, hold accurate beliefs—a cornerstone of standard economics—when facing the house purchase.

The results offer evidence in line with our hypothesis that home buyers systematically overestimate their future life satisfaction just before as well as just after having relocated to their acquired dwelling. This provides support for the speculation that home buyers potentially rely on biased beliefs regarding the long-term benefits of home ownership in the decision-making process, at least if they consider the purchase of property as a main reason for moving. The finding backs the general notion that people overestimate the satisfaction consequences of certain life achievements. From this observation, it is, however, difficult to assess whether the prediction errors are primarily driven by biased beliefs people hold, for example, about their individual preferences. We therefore investigate the heterogeneity in prediction errors across groups with different life goals, reflecting differences in underlying beliefs about preferences or, more generally, what goals should be pursued in life to satisfy needs. Specifically, we study differences regarding the preferability of extrinsic versus intrinsic life goals. We find that home buyers with extrinsically oriented life goals compared to those with intrinsically oriented ones tend to make bigger prediction errors. This result provides evidence for biased beliefs and demonstrates the crucial role of the heterogeneity in people’s beliefs regarding the well-being consequences of certain decisions.

Our study questions the ancillary role that is ascribed to beliefs in most economic applications. If people predict the utility from decision outcomes based on beliefs about their preferences, individuals’ choices would not reveal true preferences, but rather beliefs regarding preferences. Our findings provide evidence in this direction by showing that the accuracy of people’s predictions depends on their belief system. A further investigation of the role of beliefs is a promising topic for future research, as it affects fundamental theoretical assumptions of the economic approach. For example, one could study to what extent beliefs about the utility derived from goods or experiences are influenced by factors such as culture and formal institutions, advertising or, on the individual level, parenting and education. Such endogeneity of people’s beliefs complements what has up to now been discussed under the notion of endogenous preferences in economics [see, e.g., (Bowles, 1998)].

Another perspective on the role of beliefs in economics is that the formation of beliefs plays a fundamental role in the process when people are trying to achieve short- and long-term goals in life. In this process, accuracy might not be the only objective, as beliefs also serve the important purpose of motivating people so that they persevere in applying effort to achieve goals (see (Bénabou & Tirole, 2016) or (Epley & Gilovich, 2016) on motivated beliefs). This instrumental aspect emphasizing the enhancement of self-efficacy is complemented by other motives, as people might want to share beliefs in accordance with their peer group or their self-image. Other reasons for belief distortions are discussed by Brunnermeier and Parker (2005), who argue that a small bias in subjective beliefs can lead to first-order gains due to increased anticipatory utility (see also (Loewenstein & Molnar, 2018) for a review on belief-based utility). Accordingly, people might (implicitly) trade-off belief-based utility in the short-term for accuracy in the long-term. Whether this trade-off is sub-optimal, reducing individuals’ welfare overall, is difficult to judge however, also within our framework. The less people value and consume the dream of home ownership per se beforehand, the more likely will mispredicted utility be related to a welfare loss due to inaccurate beliefs.

From a general perspective, it is crucial that economic analysis gains a better understanding of the role of individuals’ beliefs as a driver of mispredicted utility and potentially sub-optimal behavior. Such a research enterprise also involves the forces and actors that influence people’s (life) goals and thus their beliefs. If these actors pursue private interests, influence might translate into attempts at manipulation. It is thus important that the conditions under which biased beliefs evolve and influence decision-making processes are identified, an account that economics has not offered so far.

Recognition of Masked Faces in the Era of the Pandemic: No Improvement Despite Extensive Natural Exposure

Recognition of Masked Faces in the Era of the Pandemic: No Improvement Despite Extensive Natural Exposure. Erez Freud et al. Psychological Science, September 12, 2022. https://doi.org/10.1177/09567976221105459

Abstract: Face masks, which became prevalent across the globe during the COVID-19 pandemic, have had a negative impact on face recognition despite the availability of critical information from uncovered face parts, especially the eyes. An outstanding question is whether face-mask effects would be attenuated following extended natural exposure. This question also pertains, more generally, to face-recognition training protocols. We used the Cambridge Face Memory Test in a cross-sectional study (N = 1,732 adults) at six different time points over a 20-month period, alongside a 12-month longitudinal study (N = 208). The results of the experiments revealed persistent deficits in recognition of masked faces and no sign of improvement across time points. Additional experiments verified that the amount of individual experience with masked faces was not correlated with the mask effect. These findings provide compelling evidence that the face-processing system does not easily adapt to visual changes in face stimuli, even following prolonged real-life exposure.

Discussion

Face masks were an important tool in the effort to minimize COVID-19 virus transmission (Cheng et al., 2020). Accordingly, the years 2020 to 2022 provided an unprecedented opportunity to examine the effects of prolonged and frequent exposure to occluded faces on recognition abilities. Here, we have documented persistent quantitative and qualitative alterations in face-processing abilities for masked versus nonmasked faces, with no evidence of improvement in the processing of masked faces over time. Using a combined cross-sectional and longitudinal approach, we found that the CFMT scores for upright faces decreased by approximately 15% when masks were added to the faces. This reduction remained statistically constant across 20 months, a period of extensive exposure to masked faces. This finding suggests that the matured face-processing system did not benefit from the prolonged exposure. Additional experiments and analyses confirmed and extended this conclusion and showed that the consistent decrement in face processing of masked faces was evident even when individual differences in exposure to these faces were considered.

Another key finding is the consistent and robust reduction of the face-inversion effect for masked faces across all time points. In particular, the inversion effect was roughly 43% smaller for masked faces. The inversion effect is suggested to reflect difficulties extracting the configural relationships between face parts (Farah et al., 1995; Freire et al., 2000). Hence, the smaller inversion effect for masked faces may be taken as evidence that holistic processing is largely reduced (although not entirely abolished). This qualitative change in the processing of masked faces was consistent across time points, providing additional evidence for the rigidity of the matured face-processing system.

Why is there no improvement in masked-face recognition?

The consistent effect of masks across time points could reflect the rigidity of the matured face-processing system. In particular, face perception rapidly develops in infancy but is then subject to a prolonged developmental trajectory (Pascalis et al., 2011, 2020). In early childhood, face processing is shaped by experience with other faces (Bate et al., 2020). One of the best examples of this malleability comes from the other-race effect, which is evident early in life (Kelly et al., 2009) but could be reversed or disappear if a child is regularly exposed to other-race faces (De Heering et al., 2010; Sangrigoli et al., 2005). In contrast, in adulthood, face-processing mechanisms are already in place and are less likely to be affected by experience (Pascalis et al., 2020; White, Kemp, Jenkins, Matheson, & Burton, 2014; Yovel et al., 2012). Here, we show that even extensive, naturalistic exposure to masked faces is not sufficient to facilitate the recognition of these faces, even though the eyes region, which is disproportionally critical for face recognition (Butler et al., 2010; Caldara et al., 2005; Royer et al., 2018; Tardif et al., 2019), remains uncovered.

An additional account for the lack of improvement in recognizing masked faces relates to the nature of the interaction. One can argue that mere exposure to masked unfamiliar faces may not suffice to revamp face-processing mechanisms. However, we note that daily encounters with masked people typically include more than just passive viewing. For example, in the grocery store, a person may need to identify their neighbor or their preferred cashier. An office worker needs to recognize peers and customers. Parents who pick up their children from school interact with other parents, children, and teachers. Hence, daily experiences provide a rich arena of exposures and the need to recognize masked faces. Yet our data suggest that such naturalistic exposures and interactions might be insufficient in eliciting adaptation of the face-processing system. A more refined view is that improvement in face-processing abilities in adulthood depends on deliberate, systematic training programs and does not rely on naturalistic exposure. This view is supported by recent studies that show effects of systematic training programs that include individuation tasks (McGugin et al., 2011; Yovel et al., 2012) and ongoing feedback (White, Kemp, Jenkins, & Burton, 2014). Note, however, that even these systematic training programs bring only very moderate improvement in face recognition.

The results could also be attributed to another intriguing possible mechanism; the current situation may be part of a vicious circle, one that reduces the chances to improve. On the one hand, there is massive exposure to masked faces, which, in many cases, require effective recognition. On the other hand, however, people have the chance to meet and to encounter nonmasked people in the privacy of their homes or via electronic media. It is possible, therefore, that such a hybrid state of affairs provides the system with a convenient escape from effectively dealing with masked faces. In other words, the current situation may limit the system’s ability to adapt, even in the face of a clear need to do so. This proposed mechanism could account for the lack of improvement that we report (almost) 2 years into the pandemic. An intriguing question is for how long such lack of improvement could persist. This, of course, depends on the extent and length of the pandemic.

Finally, the observed limited malleability of the matured face-processing system raises important questions about the ability of children to improve in recognizing masked faces. A recent study reported that in school-age children, masks hinder face-processing ability to a similar or even greater extent compared with adults (Stajduhar et al., 2022). Whether children exhibit improved masked-face recognition following prolonged exposure to masked faces in everyday life remains to be determined.

Limitations

The current investigation is timely and unique and benefits from the large sample size and combination of approaches. However, there are still important limitations that should be addressed in future studies. First, although the CFMT is a reliable test that has been used extensively over the past two decades (Bobak et al., 2016; Russell et al., 2009), the faces included in this test are all Caucasian men. Given the gender effect observed in our data as well as by other groups (Bobak et al., 2016), it is important to examine the reported effects using other, more diverse tests (Scherf et al., 2017). Another concern regards the ecological validity of the CFMT. Specifically, external face cues, which are important for real-life face recognition, are not available in this test. This concern might be more detrimental in the case of masked faces. However, it is important to note that previous studies reported correlations between CFMT scores and subjective reports of face-recognition abilities (Shah, Gaule, et al., 2015), between the CFMT and other measurements of face-processing abilities (DeGutis et al., 2013; Russell et al., 2009), and, most importantly, between CFMT scores and naturalistic assessments of face-perception abilities (Balas & Saville, 2017). It is also worth noting that previous studies demonstrated the existence of the mask effect for other test and image sets, including the GFMT (Carragher & Hancock, 2020; see also the control experiment described above) and the Karolinska Directed Emotional Faces (Marini et al., 2021), in which external face cues are preserved.

The concern regarding ecological validity also applies to the absence of other cues that might facilitate person recognition, such as motion, voice, and body shape. Importantly, however, it is established that faces play a superior role in person recognition even when other cues are available (Hahn et al., 2016). This is demonstrated in cases of prosopagnosia, which is experienced in daily life even when all cues are available.

Another limitation of the current image set (as well as other image sets used in previous studies) is that the masks were added to existing pictures in an artificial manner. This might lead to an omission of face shape cues that are normally available and plausibly critical for recognizing masked faces in naturalistic settings. Although we cannot rule out the detrimental effect of the artificial mask on face perception, a recent study by Marini and colleagues (2021) demonstrated the existence of a mask effect even for transparent masks that reveal important cues from the lower part of the face. Hence, it is unlikely that the mask effect observed here, especially the lack of improvement in face perception for masked faces, is solely due to the nature of the stimuli.

Converging theoretical and empirical evidence points to suicide being a fundamentally aleatory event – that risk of suicide is opaque to useful assessment at the level of the individual

On the Randomness of Suicide: An Evolutionary, Clinical Call to Transcend Suicide Risk Assessment. C. A. Soper, Pablo Malo Ocejo and Matthew M. Large. Chp 9 in Evolutionary Psychiatry: Current Perspectives on Evolution and Mental Health. Cambridge University Press, September 8 2022. https://www.cambridge.org/core/books/abs/evolutionary-psychiatry/on-the-randomness-of-suicide/17353786992D8A3F0A7EEC7850F44F96

Summary: Converging theoretical and empirical evidence points to suicide being a fundamentally aleatory event – that risk of suicide is opaque to useful assessment at the level of the individual. This chapter presents an integrated evolutionary and clinical argument that the time has come to transcend efforts to categorise peoples’ risk of taking their own lives. A brighter future awaits mental healthcare if the behaviour’s essential non-predictability is understood and accepted. The pain-brain evolutionary theory of suicide predicts inter alia that all intellectually competent humans carry the potential for suicide, and that suicides will occur largely at random. The randomness arises because, over an evolutionary timescale, selection of adaptive defences will have sought out and exploited all operative correlates of suicide and will thus have exhausted those correlates’ predictive power. Completed suicides are therefore statistical residuals – events intrinsically devoid of informational cues by which the organism could have avoided self-destruction. Empirical evidence supports this theoretical expectation. Suicide resists useful prediction at the level of the individual. Regardless of the means by which the assessment is made, people rated ‘high risk’ seldom take their own lives, even over extended periods. Consequently, if a prevention treatment is sufficiently safe and effective to be worth allotting to the ‘high-risk’ subset of a cohort of patients, it will be just as worthwhile for the rest. Prevention measures will offer the greatest prospects for success where the aleatory nature of suicide is accepted, acknowledging that ‘fault’ for rare, near-random, self-induced death resides not within the individual but as a universal human potentiality. A realistic, evolution-informed, clinical approach is proposed that focuses on risk communication in place of risk assessment. All normally sapient humans carry a vanishingly small daily risk of taking their own lives but are very well adapted to avoiding that outcome. Almost all of us nearly always find other solutions to the stresses of living.