News from Division 9: Economic Psychology
by Tadeusz Tyszka
1. Address by outgoing president
It is my honor to address a few words to all members of Economic Psychology. First of all, as an outgoing president of Division 9 of IAAP, I would like to express my gratitude for your great scientific, and organizational effort / activity. A particular “thank you” note should be given to all of you who contributed to prepare symposia on economic psychology for the upcoming IAAP Congress. A very special gratefulness should be given to vote participants who chose Prof. David Leser from Ben Gurion University as a new president elect.
2. Current information
Thus, from the election and at the end of Melbourne conference, we have the following officials in Division 9:
President of Economic Psychology Division:
Universität Wien, Austria
Leon Kozminski University, Warsaw, Poland
Prof. David Leiser
Ben Gurion University, Departament of Psychology
Dr. Tomasz Zaleskiewicz
Warsaw School of Social Sciences and Humanities
Center for Research in Economic Psychology
Internet web page of the Economic Psychology Division
ICAP Melbourne 2010 program of Division 9
Presidential address: Prof. Tadeusz Tyszka: The role of moral sentiment in economic decision making.
Keynote lecture: Prof. Valerie Braithwaite: Taxpayers and their behavior in relation to tax office authority.
Invited Symposium 1: Behavioral Finance (Prof Dr Erich Kirchler, Faculty of Psychology, University of Vienna, Austria, and Prof Dr Christine Rolland-Lévy, University of Reims, France)
Invited Symposium 2: Decision making (Prof Tadeusz Tyszka)
Other upcoming conferences
In 2010 the next IAREP colloquium will be held in Cologne
Further information can be found on the IAREP web page: http://www.iarep.org
3. Recent challenges to economic psychology
The recent financial crisis, which strongly affected many people, has evoked a discussion on "Economic Psychology and the Global Economic Crisis". Actually our president elect, David Leiser, organized such a symposium at IAREP/SABE conference, 2009, July 7-11, Halifax, Canada. He also prepared a special issue of The Journal of Socio-Economics, devoted to the financial crisis. Participants of these events perceive the financial crisis as a challenge to behavioral economists and economic psychologists. Both IAREP (International Association for Research in Economic Psychology), and SABE (Society for Advancement in Behavioral Economics) are expected to contribute to the understanding of such an important phenomenon and to propose elements of remedy and prevention. Participants of these events claim that an economic policy that does not take into account psychology is fundamentally incomplete. Different means for the recovery are also discussed.
Financial crisis is not the only topic challenging economic psychology. There are many other such topics, for example, in catastrophic situations such as floods and other natural disasters. After the huge floods of 1997 and 1998 in Poland, in 2010 we had another flood. Surprisingly we might experience a “millennium flood” once again in a few years. A central question is how to provide public with the information that can be understood and used. Studies on risk perception by Paul Slovic and his collaborators are relevant in this context. Warnings formulated on the basis of forecasts must be transmitted to persons at risk, inhabitants, owners of firms, or employees of community services, who need it to make appropriate decisions and take appropriate action.
In conclusion, I hope to see many of you in Melbourne, and I would like to wish the president elect, Prof. Erich Kirchler to successfully lead our organization towards further scientific discoveries and practical implementations.
Dear Members of the IAAP Division 9,
We would like to give you some information about our upcomming activities. Our
Division organizes two symposia during the IAAP Congress in Melbourne.
Symposium 1: Money management
Organizers: Erich Kirchler, Erik Hoelzl and Christine Roland-Lévy
The symposium deals with applied psychological research on money management. In
detail, the invited presentations focus on income distribution and emotional reactions
related to income differences, on social representations of saving and credit,
predictions of credit burden and evaluation of repayment plans as well as hindsight
effects after successful credit payback, on socially responsible investment and the
stock market, and tax behavior.
Key learning objectives are demonstrating the variety of economic psychological
topics in theory, method and application. In particular the focus of the symposium is
on the interaction between emotional and cognitive dynamics in money management.
In bringing together experts on different areas of money management, coming from
different countries, the discussion should focus on common themes and potential
Symposium 2: Decision Making
Organizer: Tadeusz Tyszka
A focus of this symposium is understanding economic behavior and in particular
psychology of decision making. One of the most cited models in this field is prospect
theory. Two first papers of this symposium deal with his theory. One of them
concerns a possible enlargement of prospect theory from monetary to non-monetary
dimensions like: pain, waiting durations, life expectancy, etc. Results indicate that
the theory is valid also for these non-monetary dimensions. Another component of the
prospect theory, the probability weighting function was studied in the second paper.
Findings show that the shape of the probability weighting function is related to format
the probabilistic information is presented to the decision maker. There seems to be
several advantages of using the experience-based format for communicating
probabilistic information. Taken together, these results demonstrate once again
theoretical advantages of the prospect theory.
Two other papers are focused on how people make economic decisions
associated with moral questions. Studies seem to showed that the strength of
emotions evoked by violating a moral norm, influences both moral judgments and
moral choices. Under strong emotions moral judgments became consistent
deontological position, while under weaker moral emotions they became consistent
with the consequentialistic position. Stronger moral emotions evoked by the violation
of a moral norm made people less sensitive to changes in the values of outcomes and
probabilities of materialistic consequences. The sensitivity to outcomes and
probabilities of materialistic consequences indicates applying by the decision maker a
compensatory decision rule, while insensitivity to these parameters indicates applying
a non-compensatory decision rule.
Moral aspects in economic decision making are also studied in experimental games.
Research show that very young children (between three and four) are generally
selfish. However, older children (seven years old) develop a sense of what is fair and
what is not. The results of the research presented here show that one of determinants
that children’s choices became more fair is the structure of the game.
Division 9 will be represented during the IAAP Congress in Melbourne by two lectures:
Keynote lecture: Taxpayers and their behaviour in relation to tax office authority,
by professor Valerie Braithwaite;
Presidential address: The role of moral sentiment in economic decision making,
by profssor Tadeusz Tyszka.
Looking forward to see you in Melbourne,
Tadeusz Tyszka – Division 9 President