Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/232653
Authors: 
Fe, Eduardo
Gill, David
Prowse, Victoria L.
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13901
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We investigate how childhood cognitive skills affect strategic sophistication and adult outcomes. In particular, we emphasize the importance of childhood theory-of-mind as a cognitive skill. We collected experimental data from more than seven hundred children in a variety of strategic interactions. First, we find that theory-of-mind ability and cognitive ability both predict level-k behavior. Second, older children respond to information about the cognitive ability of their opponent, which provides support for the emergence of a sophisticated strategic theory-of-mind. Third, theory-of-mind and age strongly predict whether children respond to intentions in a gift-exchange game, while cognitive ability has no influence, suggesting that different measures of cognitive skill correspond to different cognitive processes in strategic situations that involve understanding intentions. Using the ALSPAC birth-cohort study, we find that childhood theory-of-mind and cognitive ability are both associated with enhanced adult social skills, higher educational participation, better educational attainment, and lower fertility in young adulthood. Finally, we provide evidence that school spending improves theory-of-mind in childhood.
Subjects: 
cognitive skills
theory-of-mind
cognitive ability
fluid intelligence
children
experiment
strategic sophistication
level-k
bounded rationality
non-equilibrium thinking
intentions
gift-exchange game
competitive game
strategic game
ALSPAC
social skills
adult outcomes
life outcomes
education
fertility
labor market
wages
employment
school spending
childhood intervention
JEL: 
C91
D91
J24
Document Type: 
Working Paper

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