Are risk aversion and impatience related to cognitive ability?

Arbeitspapier

This paper investigates whether risk aversion and impatience are correlated with cognitive ability. We conduct incentive compatible choice experiments measuring risk aversion, and impatience over an annual time horizon, for a representative sample of roughly 1,000 German adults. A measure of cognitive ability is provided by two submodules of one of the most widely used IQ tests. Interviews are conducted in subjects' own homes. We find that lower cognitive ability is associated with greater risk aversion, and more pronounced impatience. These relationships are statistically and economically significant, and robust to controlling for personal characteristics, educational attainment, income, and measures of liquidity constraints. We perform a series of additional robustness checks, which help rule out other possible confounds.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2620

Classification and Topics

• Classification: Wirtschaft ; Field Experiments ; Microeconomic Behavior: Underlying Principles ; Information, Knowledge, and Uncertainty: General ; Micro-Based Behavioral Economics: General‡ ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Job, Occupational, and Intergenerational Mobility; Promotion
• Subject: risk preference ; time preference ; cognitive ability ; field experiment ; Verhalten ; Risikopräferenz ; Kognition ; Bildungsniveau ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dohmen, Thomas ; Falk, Armin ; Huffman, David ; Sunde, Uwe
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/26665
• Last update: 10.03.2025, 11:44 AM CET