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Archive for August 2007

Surprise: Household Mold Linked To Depression

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Surprise, surprise: a rather absurd public health study has found a connection between damp, moldy homes and depression. The study, led by Brown University epidemiologist Edmond Shenassa, is the largest investigation of an association between mold and mood and is the first such investigation conducted outside the United Kingdom.

Shenassa himself, somewhat naively, said the findings came as a complete surprise. In fact, after a few U.K. studies published in the last decade had suggested a link, Shenassa and his skeptical team set out to debunk the notion that any link existed.

“We thought that once we statistically accounted for factors that could clearly contribute to depression – things like employment status and crowding – we would see any link vanish,” said Shenassa, the lead author of the study and an associate professor in the Department of Community Health at Brown. “But the opposite was true. We found a solid association between depression and living in a damp, moldy home.” Obviously none of those skeptical researchers does live under deteriorated housing conditions against his will. Else, the thoughr might have been much less surprising to them.

The analysis of data from nearly 6,000 European adults, does not prove that moldy homes cause depression. The study wasn’t designed to draw that direct conclusion. However, Shenassa’s team did find a connection, one likely driven by two factors. One factor is a perceived lack of control over the housing environment. The other is mold-related health problems such as wheezing, fatigue and a cold or throat illness.

Striking triviality to common sense, it is now scientifically proven: “Physical health, and perceptions of control, are linked with an elevated risk for depression…” The ingenious Shenassa admits on top of it: “and that makes sense. If you are sick from mold, and feel you can’t get rid of it, it may affect your mental health.”

The study was a statistical analysis of data from the Large Analysis and Review of European Housing and Health Status (LARES), a survey on housing, health and place of residence conducted in 2002 and 2003 by the World Health Organization (WHO). To conduct the survey, WHO interviewers visited thousands of homes in eight European cities and asked residents a series of questions, including if they had depressive symptoms such as decreased appetite, low self-esteem, and sleep disturbances. WHO interviewers also made visual checks of each household, looking for spots on walls and ceilings that indicate mold.

Shenassa’s team analyzed LARES data from 5,882 adults in 2,982 households.

“What the study makes clear is the importance of housing as indicator of health, including mental health,” Shenassa said. “Healthy homes can promote healthy lives.”

Shenassa and his team are conducting follow-up research to see if mold does, indeed, directly cause depression. Shenassa said that given the results of the current study, he wouldn’t be surprised if there is a cause-and-effect association. Molds are toxins, and some research has indicated that these toxins can affect the nervous system or the immune system or impede the function of the frontal cortex, the part of the brain that plays a part in impulse control, memory, problem solving, sexual behavior, socialization and spontaneity.

American Journal of Public Health, 10.2105/AJPH.2006.093773

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Dampness and Mold in the Home and Depression: An Examination of Mold-Related Illness and Perceived Control of One’s Home as Possible Depression Pathways
Edmond D. Shenassa 1*, Constantine Daskalakis 2, Allison Liebhaber 1, Matthias Braubach 3, MaryJean Brown 4

1 Brown School of Medicine, Dept. of Community Health
2 Thomas Jefferson University
3 World Health Organization
4 Harvard School of Public Health

* To whom correspondence should be addressed. E-mail: edmond_shenassa@brown.edu.

Abstract

Objectives. We evaluated a previously reported association between residence in a damp and moldy dwelling and the risk of depression and investigated whether depression was mediated by perception of control over one’s home or mold-related physical illness.

Methods. We used survey data from 8 European cities. A dampness and mold score was created from resident- and inspector-reported data. Depression was assessed using a validated index of depressive symptoms.

Results. Dampness or mold in the home was associated with depression (odds ratio [OR]=1.39, 1.44, and 1.34, for minimal, moderate, and extensive exposure, respectively, compared with no exposure). This association became attenuated when perception of control (OR=1.34, 1.40, and 1.24; global P=.069) or a physical health index (OR=1.32, 1.37, and 1.15; global P=.104) was included in the model. The mediation effects of perception of control over one’s home and by physical health appeared to be additive.

Conclusions. Dampness and mold were associated with depression, independent of individual and housing characteristics. This association was independently mediated by perception of control over one’s home and by physical health.

Written by huehueteotl

August 30, 2007 at 3:28 pm

An End To Snobbery? Ordinary People Have Surprisingly ‘Good Taste’

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Previous studies have shown that there is a very weak correlation between experts’ judgments of cultural entertainment, such as movies, and popular judgments. These findings have been taken to mean that ordinary people don’t have “good taste.”

However, a new study by researchers at Columbia University and Boccini University, Italy, argues that when controlling for marketing campaigns, regular consumers show more “good taste” than previously thought. Or, perhaps the nouveau riche are judging as poorly as they did when they were still regular consumers, and among the latter there are more victims of “new poverty”?

The most common working definition of “good taste” utilizes the judgment of experts, who have honed their understanding of a particular cultural field through a long period of training. Empirical studies using this standard of taste have tended to find statistically significant but rather weak associations between expert judgment and market success with a mass audience.

However, instead of looking at box-office success, which can be contaminated by marketing campaigns as well as sharp drop-offs after opening weekend, Morris B. Holbrook (Columbia University) and Michela Addis (Bocconi University, Italy) analyze reviews of movies done by non-professionals, including those on the popular Web site IMdb.com. They find a close association between expert opinion and the opinions of ordinary people.

“When using sequential and independent measures and when controlling for marketing-related aspects of a film’s commercial impact — our findings support the conclusion that ordinary consumers show “good taste” to a degree not hitherto recognized,” the authors write. With proper controls for the contaminating influences of market success they find that “Films of the sort that win favorable evaluations of excellence from expert reviewers also tend to win approval from ordinary consumers and that films of the kind that ordinary consumers consider excellent tend to elicit liking and word-of-mouth or click-of-mouse recommendations.”

JOURNAL OF CONSUMER RESEARCH, Inc. · Vol. 34 · October 2007
Taste versus the Market: An Extension of Research on the Consumption of Popular Culture

MORRIS B. HOLBROOK; MICHELA ADDIS*

Previous studies of cultural consumption have found a significant but weak relationship between expert judgment (EJ) and popular appeal (PA) and have suggested that this “little taste” phenomenon reflects a mediating role played by ordinary evaluation (OE) in diluting the association between EJ and PA. However, various weaknesses in this work have involved problems with sequential timing, nonindependence of measurements, and contamination by market(ing)-related influences. The present investigation of new data on motion pictures addresses these concerns to show that, when controlling for market success, consumers display aspects of “good taste” via indirect links from EJ to OE to PA.

——————————————————————————–

* Morris B. Holbrook is the W. T. Dillard Professor of Marketing, Graduate School of Business, 504 Uris Hall, Columbia University, New York, NY 10027 (mbh3@columbia.edu). Michela Addis is associate professor, Management and Law Department, University of Rome III, Rome, 00145, Italy (maddis@uniroma3.it). The authors gratefully acknowledge the support of the Columbia Business School’s Faculty Research Fund and of Bocconi University, as well as the helpful comments on previous drafts by the reviewers, associate editor, and editor.

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August 30, 2007 at 12:16 pm

My Car’s Smarter Than Me

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Cars already automatically lock doors when they sense motion and turn on warning lights if they detect potential engine problems.


Sandia researcher Chris Forsythe, foreground, and companion drive a modified military vehicle as part of an experiment with smart cars. (Credit: Image courtesy of Sandia National Laboratories)

But they are about to get smarter.

The augmented cognition research team at Sandia National Laboratories is designing cars capable of analyzing human behavior.

The car of the future they are developing may, for example, deduce from your driving that you’re become tired, or during critical situations, tell your cell phone to hold an incoming call so you won’t be distracted.

The project started about five years ago with funding by the Defense Advanced Research Projects Agency (DARPA). Four years ago Sandia partnered with a major commercial automobile manufacturer, and three years ago did actual experiments on European roadways.

“We utilized data that already existed on the car’s computer to collect a wide range of physical data such as brake pedal force, acceleration, steering wheel angle, and turn signaling,” says Kevin Dixon, principal investigator. “And specialized sensors including a pressure sensitive chair and an ultrasonic six-degree-of freedom head tracking system measured driver posture.”

Five drivers were fitted with caps connected to electroencephalogram (EEG) (brainwave) electrodes to gauge electrical activity of the brain as they performed driving functions.

The researchers collected several hours of data in unstructured driving conditions that were imputed into Sandia software, referred to as “classifiers,” that categorized driving behavior. These classifiers could detect certain driving situations such as approaching a slow-moving vehicle or changing lanes in preparation to pass another vehicle.

The system detects the difficulty and stress of the task the driver is attempting. It then tries to modify the tasks and/or environment to lower the stress and improved specified performance parameters.

Similar experiments were conducted for off-road driving where conditions were much less structured than typical roadways.

“The beauty of this is that we aren’t doing anything new or different to the car,” Dixon says. “All the software that can make the determination of ‘dangerous’ or ‘safe’ driving situations would all be placed in the computer that already exists in the car. It’s almost like there is another human in the car.”

More recently, the researchers conducted experiments at Camp Pendleton with Marine Corps personnel driving a modified military vehicle. Once again the driver and a passenger sitting in the passenger’s seat were fitted with EEGs. The software classifier determined how difficult the driving situation was and who the best person of the two was to perform a task. For example, during a difficult driving maneuver, it might be best for the passenger to receive radio transmissions in order to not distract the driver

“Every year tens of thousands of people die in automobile crashes, many caused by driver distraction,” Dixon says. “If our algorithms can identify dangerous situations before they happen and alert drivers to them, we will help save lives.”

Sandia is a National Nuclear Security Administration (NNSA) laboratory.

Note: This story has been adapted from a news release issued by Sandia National Laboratories.

Written by huehueteotl

August 30, 2007 at 8:57 am

Magdalena Kozena – Ah mio cor (Händel-Arien)

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kozena_haendel.jpg

Erscheinungstermin: 17.8.2007

Another Diva prey to the seemingly irresistible temptation to sing Castrato-Arias out of her register. Fascinating recital with (perhaps a bit too) much impetus, dramatic coloraturas and annyoing respiration technique. Beyond this M. Kozena sparkles with all possibilites of carefully executed ornaments and subtle colours.

The Venice Baroque Orchestra, conducted by Andrea Marcón,is ways more convincing, although daring in the reading of Haendel’s scores. Soloist and orchestra work together at best probably in the first aria of the selection: Alcina’s Ah mio cor. The rest is at best what it probably was meant to be: peculiar, even very much so.

Written by huehueteotl

August 29, 2007 at 7:00 pm

Posted in HIV, Music

Men Choose Romance Over Success

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Gender role conception seems to shift with changing generations. Among students, the young men may be more willing than women to sacrifice achievement goals for a romantic relationship, according to a new study by Catherine Mosher of Duke Medical Center and Sharon Danoff-Burg from the University of Albany. Their findings challenge our preconceptions that women are more likely to prioritize people and relationships while men are more focused on themselves and their achievements.

The authors looked at whether personality traits influence students’ life goals, and focused on the relative importance of romantic relationships and achievement goals in particular. A total of 237 undergraduate students (80 men and 157 women aged 16 to 25 years), from the psychology department at a state university in the northeast of the US, completed questionnaires measuring personality traits and life goals.

In particular, Mosher and Danoff-Burg looked at ‘agency’, or the focus on oneself and the formation of separations, including self-assertion, self-protection, and self-direction, as well as ‘communion’, or the focus on other people and relationships, which involves group participation, cooperation and formation of attachments. In general, women tend to score higher on measures of communion whereas men tend to score higher than women on measures of agency.

Life goals included seven achievement goals (physical fitness, travel, financial success, home ownership, contribution to society, career and education) and five different types of relationships (romantic, marriage, children, circle of friends and family ties). Participants’ willingness to sacrifice achievement goals for a romantic relationship was also examined.

Overall both college men and women showed strong desires for individual achievement and relational intimacy. As expected, self-focus was linked to the importance of achieving, such as having a successful career. Focus on others was related to the importance of having meaningful relationships and making a contribution to society.

Unexpectedly however, men were more likely than women to give priority to a romantic relationship when asked to choose between a relationship and their career, education and traveling.

The authors suggest that college women in this study may have been strongly committed to working towards a successful career and therefore hesitant to abandon their goals for a romantic relationship. In contrast to women, men also appear to derive more emotional support from their opposite-sex relationships than their same-sex friendships.

 

Gender Issues 

College Students’ Life Priorities: The Influence of Gender and Gender-linked Personality Traits

Catherine MosherContact Information and Sharon Danoff-Burg2

(1)  Duke University Medical Center, Durham, NC, USA
(2)  University of Albany, SUNY, Albany, NY, USA

Published online: 20 July 2007

Abstract  This study examined relations between gender-linked personality traits (i.e., agency and communion) and life goals in a sample of 237 undergraduates. In addition, gender similarities and differences in the relative importance of life goals were explored. As predicted, agency was positively associated with the importance of most achievement goals such as having a career, whereas communion and unmitigated communion were positively associated with the importance of relational goals such as romantic partnership. Contrary to predictions, results suggested that men were more willing than women to sacrifice some achievement goals for a romantic relationship. Findings point to the potential influence of gender and gender-linked personality traits on the establishment of life priorities.

Keywords  Agency - Communion - Gender - Goals - Personality

see also:

Gender Role And How We Gain It

Written by huehueteotl

August 29, 2007 at 2:39 pm

Posted in Psychology

Not All Risk Is Created Equal

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A camper who chases a grizzly but won’t risk unprotected sex. A sky diver afraid to stand up to the boss. New research shows that not all risk is created equal and people show a mixture of both risky and non-risky behaviors.

The survey also shows that men are significantly riskier than women overall.

The University of Michigan research refutes the standard theories of risk that group people as either risk-seeking or risk-avoiding, and suggests that we can have a mix of both risky and non-risky behavior depending on the type.

The study appears in the journal Evolutionary Psychology. Daniel Kruger, a research scientist at the U-M School of Public Health, and colleagues X.T. Wang, University of South Dakota, and Andreas Wilke, UCLA, identified areas of risk taking (risk domains) based on the types of challenges that our ancestors faced during many thousands of years of human evolution.

“People are complex,” said Kruger. “Just because somebody seems to be a big risk taker in one area doesn’t mean they will take risks in all areas.”

The types of risks identified include competition with other individuals; competition with other groups; mating and allocating resources for mate attraction; environmental risks (chasing a bear or skydiving); and fertility risks. The study showed that our tendencies for risk taking follow these different types of challenges.

“It is remarkable not just that we were able to identify different areas of risk taking, but also that many of the challenges faced by our ancestors are similar to challenges we face in our modern world today,” Kruger said.

People surveyed for the study were least likely to take fertility risks, and most likely to take risks related to social status in one’s group — like standing up to one’s boss. In all domains, men were significantly more risk taking than women. During human evolution, men competed for social status and resources in order to attract mates. Thus, this pattern is not surprising, Kruger said.

The risks that threaten fertility function differently than the others, Kruger said. Other types of risk have a possible benefit in terms of survival and reproduction. But with fertility risks, there is just a threat to reproduction. They can only cause harm in the evolutionary sense since they would only hurt our ability to procreate.

“Those were types of risks that weren’t attractive to other people, those risks were the least likely to be taken, and people saw those risks as unattractive in a potential mate,” Kruger said.

Although in most parts of the world, threats from predators may be limited to those making wilderness expeditions, we still live in a world with complex challenges involving other individuals and material investments. The basic elements of our social environment have not changed; we just live on a much larger scale.

Evolutionary Psychology
www.epjournal.net – 2007. 5(3): 555-568


Daniel J. Kruger, School of Public Health, University of Michigan, Ann Arbor, USA. Email: djk2012@gmail.com (Corresponding author) X.T. Wang, Department of Psychology, University of South Dakota, USA. Email: xt.wang@usd.edu Andreas Wilke, Center for Behavior, Evolution and Culture, UCLA Department of Anthropology, USA. Email: wilke@ucla.edu

Abstract:

From an evolutionary perspective, human risk-taking behaviors should be viewed in relation to evolutionarily recurrent survival and reproductive problems. In response to recent calls for domain-specific measures of risk-taking, we emphasize the need of evolutionarily valid domains. We report on two studies designed to validate a scale of risky behaviors in domains selected from research and theory in evolutionary psychology and biology, corresponding to reoccurring challenges in the ancestral environment. Behaviors were framed in situations which people would have some chance of encountering in modern times. We identify five domains of risk-taking: between-group competition, within-group competition, mating and resource allocation for mate attraction, environmental risks, and fertility risks. Keywords: risk taking, individual differences, evolutionary domains, adaptation; domain-specificity..

Written by huehueteotl

August 29, 2007 at 11:50 am

Posted in Psychology

Bad Memories Are More Vivid Than Good

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Do you remember exactly where you were when you learned of the Sept. 11 terrorist attacks? Your answer is probably yes, and researchers are beginning to understand why we remember events that carry negative emotional weight.

In the August issue of Current Directions in Psychological Science, a journal of the Association for Psychological Science, Boston College psychologist, Elizabeth Kensinger and colleagues, explain when emotion is likely to reduce our memory inconsistencies.

Her research shows that whether an event is pleasurable or aversive seems to be a critical determinant of the accuracy with which the event is remembered, with negative events being remembered in greater detail than positive ones.

For example, after seeing a man on a street holding a gun, people remember the gun vividly, but they forget the details of the street. Functional Magnetic Resonance Imaging (fMRI), studies have shown increased cellular activity in emotion-processing regions at the time that a negative event is experienced.

The more activity in the orbitofrontal cortex and the amygdala, two emotion-processing regions of the brain, the more likely an individual is to remember details intrinsically linked to the emotional aspect of the event, such as the exact appearance of the gun.

Kensinger argues that recognizing the effects of negative emotion on memory for detail may, at some point, save our lives by guiding our actions and allowing us to plan for similar future occurrences. “These benefits make sense within an evolutionary framework,” writes Kensinger. “It is logical that attention would be focused on potentially threatening information.”

This line of research has far-reaching implications in understanding autobiographical memory and assessing the validity of eyewitness testimony. Kensinger also believes that this research may end insight into the symptoms of posttraumatic stress disorder.

Elizabeth A. Kensinger (2007)
Negative Emotion Enhances Memory Accuracy: Behavioral and Neuroimaging Evidence
Current Directions in Psychological Science 16 (4), 213–218.
doi:10.1111/j.1467-8721.2007.00506.x

ABSTRACT—There have been extensive discussions about whether emotional memories contain more accurate detail than nonemotional memories do, or whether individuals simply believe that they have remembered emotional experiences more accurately. I review evidence that negative emotion enhances not only the subjective vividness of a memory but also the likelihood of remembering some (but not all) event details. I then describe neuroimaging evidence suggesting that engagement of emotion-processing regions (particularly the amygdala and orbitofrontal cortex) relates to the encoding and retrieval of details intrinsically linked to negative items.

 

see also:

Psychon Bull Rev. 2006 Oct;13(5):757-63.

When the Red Sox shocked the Yankees: comparing negative and positive memories.

Kensinger EA, Schacter DL.

McGuinn Hall, Boston College, Chestnut Hill, MA 02467, USA. elizabeth.kensinger@bc.edu

The present study examined whether positive or negative valence affects the amount of detail remembered about a public event, and whether positive or negative valence alters other memory characteristics (consistency, vividness, and confidence). Memory for the final game of the Boston Red Sox-New York Yankees 2004 American League playoff series was assessed in individuals who found the event highly positive, highly negative, or neutral (i.e., Red Sox fans, Yankees fans, and fans of neither team). Valence did not affect the number of personal details recalled, but it did affect memory consistency (greatest for the negative-event group) and memory overconfidence (apparent only in the positive-event group). These results indicate that positive events can be remembered with the same types of distortions that have been shown previously for negative events. Moreover, it appears that, in comparison with negative valence, positive valence sometimes can be associated with decreased memory consistency and increased memory overconfidence.

PMID: 17328369 [PubMed - indexed for MEDLINE]

Written by huehueteotl

August 29, 2007 at 11:01 am

Free Will Takes Flight: Our Brains And Approaching Menace

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I am not so sure, if the countless fMRI studies who follow the pattern of “let me pinch your ass and see where it flickers in the brain” are not dangerously neighbouring Gall’s and Lombroso’s phrenology. Complexity of neuronal network makes it likely that the simplicity of topografical corelation between certain perceptions or actions and activated brain structures are due to our imaging technique rather than a functional anatomy of the brain.  

Nonetheless, Wellcome Trust scientists claim to have traced brain responses to a perceived threat. Using a “Pac Man”-like computer game where a volunteer is pursued by an artificial predator, the researchers showed that the fear response moves from the strategic areas of the brain towards more reactive responses as the artificial predator approaches.

When faced with a threat, such as a large bear, humans, like other animals, alter their behaviour depending on whether the threat is close or distant. This is because different defence mechanisms are needed depending on whether, for example, the bear is fifty feet away, when being aware of its presence may be enough, or five feet away, when we might need to fight or run away.

To investigate what happens in the brain in such a situation, researchers at the Wellcome Trust Centre for Neuroimaging at UCL, London, created a game where subjects were chased through a maze by an artificial predator — if caught, they would receive a mild electric shock. The researchers then measured their brain activity using functional magnetic resonance imaging (fMRI). The results are published today in the journal Science.

When the artificial predator was in the distance, the researchers observed activity in lower parts of the prefrontal cortex just behind the eyebrows. Activity in this area — known as the ventromedial prefrontal cortex — increases during anxiety and helps control strategies on how to respond to the threat.

However, as the predator moved closer, the brain activity shifted to a region of the brain responsible for more primitive behaviour, namely the periaqueductal grey. The periaqueductal grey is associated with quick-response survival mechanisms, which include fight, flight and freezing. This region is also associated with the body’s natural pain killer, opioid analgesia, preparing the body to react to pain.

Dr Dean Mobbs from UCL, lead author on the study, says: “Without fear, animals would not react to threats. This is a poor survival strategy and makes it more likely that the animal will be eaten and not pass on its genes.

“The most efficient survival strategy will depend on the level of threat we perceive. This makes sense as sometimes being merely wary of a threat is enough, but at other times we need to react quickly. The closer a threat gets, the more impulsive your response will be — in effect, the less free will you will have.”

Although this natural defence mechanism is beneficial in evolutionary terms, Dr Mobbs believes that malfunctions in the system might help explain why some people suffer from anxiety disorders and panic attacks.

“When our defence mechanisms malfunction, this may result in an over-exaggeration of the threat, leading to increased anxiety and, in extreme cases, panic,” says Dr Mobbs. “Although brain-imaging studies like ours cannot directly help to cure such disorders, they do improve our understanding of how the emotional system operates. This is the first step to helping people with anxiety-related disorders.”

Science. 2007 Aug 24;317(5841):1079-83.

When fear is near: threat imminence elicits prefrontal-periaqueductal gray shifts in humans.

Mobbs D, Petrovic P, Marchant JL, Hassabis D, Weiskopf N, Seymour B, Dolan RJ, Frith CD.

Wellcome Trust Centre for Neuroimaging, Functional Imaging Laboratory, University College London, London WC1N 3BG, UK. d.mobbs@fil.ion.ucl.ac.uk

Humans, like other animals, alter their behavior depending on whether a threat is close or distant. We investigated spatial imminence of threat by developing an active avoidance paradigm in which volunteers were pursued through a maze by a virtual predator endowed with an ability to chase, capture, and inflict pain. Using functional magnetic resonance imaging, we found that as the virtual predator grew closer, brain activity shifted from the ventromedial prefrontal cortex to the periaqueductal gray. This shift showed maximal expression when a high degree of pain was anticipated. Moreover, imminence-driven periaqueductal gray activity correlated with increased subjective degree of dread and decreased confidence of escape. Our findings cast light on the neural dynamics of threat anticipation and have implications for the neurobiology of human anxiety-related disorders.

PMID: 17717184 [PubMed - in process]

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August 28, 2007 at 1:03 pm

Money Illusion And The Market

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 People often pay more attention to price tags than to real value. Researchers discuss when money illusion can affect markets (eg. the housing market).
Standard economics assumes that people base their decisions on real value only and take changes in price tags properly into account. For example, a rational consumer is assumed to base his shopping decisions on “real” prices (e.g., how many hours do I have to work for a loaf of bread?) and would not change his consumption patterns if all “nominal” prices were to move in proportion (e.g. are inflated by the same factor). Yet, normal people are often confused by purely nominal changes.

To illustrate, compare a situation in which money wages increase 2.3% and prices increase 3.1% over one year with a situation in which money wages fall by 0.8% at constant prices. The two situations are equivalent in “real terms”, i.e. if inflation is taken properly into account. People who perceive these situations differently are said to be prone to money illusion.

Economists have only begun to understand when money illusion affects market outcomes. It was commonly thought that the impact of irrational behaviour is limited in markets because “smart agents” can take advantage of irrational traders. However, recent evidence from the field and the experimental laboratory suggests that money illusion can affect markets.

Effects on the housing market

A striking example comes from the housing market. Housing prices have risen sharply in several countries, and booms followed by busts are common in housing markets. Money illusion in the guise of a confusion of nominal and real interest rates may be partly to blame. When inflation is low, monthly nominal interest payments on mortgages are low compared to the rent of a similar house.

Housing prices therefore seem cheap, causing illusion-prone buyers to buy rather than rent which, in turn, causes an upward pressure on housing prices when inflation declines. However, decreasing inflation also increases the real cost of future mortgage payments. Investors who base their decision on the salient low nominal mortgage payments but ignore the less visible effect of inflation on the future real mortgage cost are prone to an illusion.

Experimental evidence

Economists have remained sceptical because field evidence consistent with money illusion may also be consistent with alternative accounts, involving fully rational agents. Such alternative accounts can convincingly be ruled out in the laboratory. Experimental studies complement field studies by investigating simpler markets but under more controlled conditions, allowing researchers to isolate the effect of money illusion.

Experiments conducted by Ernst Fehr (University of Zurich) and Jean-Robert Tyran (University of Copenhagen) show that money illusion can have a profound impact on market prices. In the experiments, decision makers are presented with either real or nominal information on profits under otherwise identical conditions to test the effect of inflating or deflating all nominal values.

The authors find that firms are reluctant to cut nominal prices with deflation in an attempt to avoid lower nominal profits associated with lower price levels, but are much less reluctant to increase nominal prices with inflation. The studies also show that money illusion has stronger effects on market prices when rational agents have incentives to “follow the crowd” rather than to “go against the tide”, i.e. when they compensate the choices of those prone to money illusion.

Fehr, Ernst and Tyran, Jean-Robert, “Money Illusion and Coordination Failure”
(February 2004). IZA Discussion Paper No. 1013; CESifo Working Paper Series No. 1141; Zurich IEER Working Paper No. 177. Available at SSRN:
http://ssrn.com/abstract=495402 or DOI: 10.2139/ssrn.495402

Abstract:
Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inefficient equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players’ behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails.

see also:

Why does foreign money seem like play money?

 and:

The Psychological Consequences of Money

Written by huehueteotl

August 28, 2007 at 12:33 pm

Posted in Psychology

Orhan Pamuk: Rot ist mein Name.

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Fischer Tb., 2003, 556 Seiten, €9,90, ISBN-3596156602, http://www.fischerverlage.de

The novel My Name is Red, by Turkish author Orhan Pamuk, to my mind focuses on two ways of seeing as its frame of reference. Beyond its qualities as a detective or love story, unfolding during the reign of Ottoman Sultan Murat III in nine snowy winter days of 1591 – which I personally find rather moderate – it highlights issues of representation in a comparative context. Pamuk’s characters confront each other on ways of seeing in sixteenth-century Istanbul, by then the capital of the Ottoman Empire. The visual narratives of Ottoman miniature painting are elaborated in comparison with the contemporary Renaissance art, unfolding the differences in the depiction of faces in particular.

 My Name is Red, instead of being very captivating for the identity of a murderer, it is ways more fascinating for the reason of murder, which is none other than the multidimensional confrontation between icon and image, tradition and innovation, idealism and realism in fine arts. In this sense, the story is also a contemporary tale, dealing with the concepts of representation and resemblance, iconoclasm and fundamentalism in the context of ‘East and West’.

Venice serves the pivot of the compass defining the scope of this presentation, joining Netherlandish painting and Ottoman miniature tradition at a common juncture. Both ways of seeing will be traced through the sixteenth century, from Hieronymus Bosch to Pieter Bruegel on the one hand and from Bihzad (the master of Persian miniature) to Nakkas Osman (the chief miniaturist of the Ottoman Palace during the second half of the second century) on the other.

Style in visual narration is treated in this novel as a reflection of seeing and imaging everything in its uniqueness and is contrasted with the tradition of Islamic book illumination where all objects appear to be cast into rigidly ruled iconografic molds, rendering the object possibly as in Allah’s own view (e.g. femaile beauty rendered invariably with chinese facial traits). Western concerns with individuality and the uniqueness of the point of view as revealed in one-point-perspective, suggests it is an indispensable aspect of style. In that sense, My Name is Red highlights portraiture in the visual arts as a reflection of character in visual narration; reflecting both the subject and the artist whose individuality is represented in the style of painting. For this, Pamuk’s novel, constructed as a symphony of many different voices, is well-suited in its form.

Written by huehueteotl

August 27, 2007 at 12:48 pm

Posted in Literature, Movies/Books, Music

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