Author(s)  
Daniel Benjamin, Sebastian Brown, Jesse M. Shapiro

In this paper, we ask whether variation in preference anomalies is related to variation in cognitive ability. Evidence from a new laboratory study of Chilean high-school students with similar schooling backgrounds shows that small-stakes risk aversion and short-run discounting are less common among those with higher standardized test scores. The relationship with test scores survives controls for parental education and wealth. We find some evidence that elementary-school GPA is predictive of preferences measured at the end of high school. Two laboratory interventions provide suggestive evidence of a possible causal impact of cognitive resources on expressed preferences.

Publication Type  
Article
Journal  
Journal of the European Economic Association
Volume  
11
Issue Number  
6
Pages  
1231-1255
JEL Codes  
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
D14: Personal Finance
C91: Design of Experiments: Laboratory, Individual