Article,
Measures of cognitive ability and choice inconsistency
Contributors
Willadsen, Helene
0000-0002-2925-7171
[1]
Piovesan, Marco
0000-0002-5721-3053
[3]
Wengström, Erik
0000-0002-1414-9055
[4]
[5]
Affiliations
- [1] University of Copenhagen [NORA names: KU University of Copenhagen; University; Denmark; Europe, EU; Nordic; OECD];
- [2] Aarhus University [NORA names: AU Aarhus University; University; Denmark; Europe, EU; Nordic; OECD];
- [3] University of Verona [NORA names: Italy; Europe, EU; OECD];
- [4] Hanken School of Economics [NORA names: Finland; Europe, EU; Nordic; OECD];
- [5] Lund University [NORA names: Sweden; Europe, EU; Nordic; OECD]
Abstract
Cognitive skills affect individual choices. Researchers commonly use Raven's Progressive Matrices (RPM) tests and the Cognitive Reflection Test (CRT) to assess the relationship between cognitive abilities and economic decision making. In this paper, we study the relationship between these measures, and investigate the extent to which they are correlated and whether they are best described as substitutes or complements. Combining a sample of 686 children and a sample of 2,332 adults, we compare individual performances in the RPM test and CRT test. First, we report a significant positive correlation between the two measures of 0.3. Second, we document that performance in both the RPM test and CRT are significant predictors of behavioral inconsistency observed in incentivized time and risk preference elicitation tasks for children and risk preference elicitation task for adults.
