Are Risk Aversion and Impatience Related to Cognitive Ability?

Thomas Dohmen, Armin Falk, David Huffman and Uwe Sunde

No 2620, CESifo Working Paper Series from CESifo

Abstract: 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.

Keywords: risk preference; time preference; cognitive ability; field experiment (search for similar items in EconPapers)
JEL-codes: C93 D01 D80 D90 J24 J62 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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https://www.cesifo.org/DocDL/cesifo1_wp2620.pdf (application/pdf)

Related works:
Journal Article: Are Risk Aversion and Impatience Related to Cognitive Ability? (2010)
Working Paper: Are risk aversion and impatience related to cognitive ability? (2010)
Working Paper: Are risk aversion and impatience related to cognitive ability? (2009)
Working Paper: Are risk aversion and impatience related to cognitive ability? (2009)
Working Paper: Are Risk Aversion and Impatience Related to Cognitive Ability? (2008)
Working Paper: Are Risk Aversion and Impatience Related to Cognitive Ability? (2007)
Working Paper: Are Risk Aversion and Impatience Related to Cognitive Ability? (2007)
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