Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26665
Authors: 
Dohmen, Thomas
Falk, Armin
Huffman, David
Sunde, Uwe
Year of Publication: 
2009
Series/Report no.: 
CESifo working paper 2620
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.
Subjects: 
risk preference
time preference
cognitive ability
field experiment
JEL: 
C93
D01
D80
D90
J24
J62
Document Type: 
Working Paper

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