122,491 research outputs found

    Cognitive abilities and portfolio choice

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    We study the relation between cognitive abilities and stockholding using the recent Survey of Health, Ageing and Retirement in Europe (SHARE), which has detailed data on wealth and portfolio composition of individuals aged 50+ in 11 European countries and three indicators of cognitive abilities: mathematical, verbal fluency, and recall skills. We find that the propensity to invest in stocks is strongly associated with cognitive abilities, for both direct stock market participation and indirect participation through mutual funds and retirement accounts. Since the decision to invest in less information-intensive assets (such as bonds) is less strongly related to cognitive abilities, we conclude that the association between cognitive abilities and stockholding is driven by information constraints, rather than by features of preferences or psychological traits

    Occupational complexity and lifetime cognitive abilities

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    OBJECTIVE: To examine associations between complexity of main lifetime occupation and cognitive performance in later life. METHODS: Occupational complexity ratings for data, people, and things were collected from the Dictionary of Occupational Titles for 1,066 individuals (men = 534, women = 532) in the Lothian Birth Cohort 1936. IQ data were available from mean age 11 years. Cognitive ability data across the domains of general ability, processing speed, and memory were available at mean age 70 years. RESULTS: General linear model analyses indicated that complexity of work with people and data were associated with better cognitive performance at age 70, after including age 11 IQ, years of education, and social deprivation. CONCLUSIONS: The current findings are supportive of the differential preservation hypotheses that more stimulating environments preserve cognitive ability in later life, although the continued effects into old age are still debated. Studies that have early-life cognitive ability measures are rare, and the current study offers interesting prospects for future research that may further the understanding of successful aging

    Cognitive Abilities and Behavioral Biases

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    We use a simple, three-item test for cognitive abilities to investigate whether established behavioral biases that play a prominent role in behavioral economics and finance are related to cognitive abilities. We find that higher test scores on the Cognitive Reflection Test of Frederick (2005) indeed are correlated with lower incidences of the conjunction fallacy, conservatism in updating probabilities, and overconfidence. Test scores are also significantly related to subjects' time and risk preferences. We find no influence on anchoring. However, even if biases are lower for people with higher cognitive abilities, they still remain substantial.

    Cognitive Abilities and Portfolio Choice

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    We study the relation between cognitive ability and the decision to invest in stocks using the recent Survey of Health, Ageing and Retirement in Europe (SHARE). The survey has detailed data on wealth and portfolio composition of individuals aged 50+ in 11 European countries and three indicators of cognitive abilities: mathematical, verbal fluency, and recall skills. We find that the propensity to invest in stocks is strongly associated with cognitive abilities, for both direct stock market participation and indirect participation through mutual funds and investment accounts. We also find that stockholding increases with social interactions, intention to leave a bequest, and is negatively associated with health status.

    Cognitive Abilities and Behavioral Biases

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    We use a simple, three-item test for cognitive abilities to investigate whether established behavioral biases that play a prominent role in behavioral economics and finance are related to cognitive abilities. We find that higher test scores on the Cognitive Reflection Test of Frederick (2005) indeed are correlated with lower incidences of the conjunction fallacy, conservatism in updating probabilities, and overconfidence. Test scores are also significantly related to subjects’ time and risk preferences. We find no influence on anchoring. However, even if biases are lower for people with higher cognitive abilities, they still remain substantial.cognitive reflection test, behavioral finance, biases, cognitive abilities

    Cognitive Abilities and Portfolio Choice

    Get PDF
    We study the relation between cognitive abilities and stockholding using the recent Survey of Health, Ageing and Retirement in Europe (SHARE), which has detailed data on wealth and portfolio composition of individuals aged 50+ in 11 European countries and three indicators of cognitive abilities: mathematical, verbal fluency, and recall skills. We find that the propensity to invest in stocks is strongly associated with cognitive abilities, for both direct stock market participation and indirect participation through mutual funds and retirement accounts. Since the decision to invest in less information-intensive assets (such as bonds) is less strongly related to cognitive abilities, we conclude that the association between cognitive abilities and stockholding is driven by information constraints, rather than by features of preferences or psychological traits.Cognitive abilities, Stockholding, Portfolio choice

    Common DNA markers can account for more than half of the genetic influence on cognitive abilities

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    For nearly a century, twin and adoption studies have yielded substantial estimates of heritability for cognitive abilities, although it has proved difficult for genomewide-association studies to identify the genetic variants that account for this heritability (i.e., the missing-heritability problem). However, a new approach, genomewide complex-trait analysis (GCTA), forgoes the identification of individual variants to estimate the total heritability captured by common DNA markers on genotyping arrays. In the same sample of 3,154 pairs of 12-year-old twins, we directly compared twin-study heritability estimates for cognitive abilities (language, verbal, nonverbal, and general) with GCTA estimates captured by 1.7 million DNA markers. We found that DNA markers tagged by the array accounted for .66 of the estimated heritability, reaffirming that cognitive abilities are heritable. Larger sample sizes alone will be sufficient to identify many of the genetic variants that influence cognitive abilities

    Cognitive abilities and behavior in strategic-form games.*

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    This paper investigates the relation between cognitive abilities and behavior in strategic-form games with the help of a novel experiment. The design allows us first to measure the cognitive abilities of subjects without confound and then to evaluate their impact on behaviour in strategic-from games. We find that subjects with better cognitive abilities show more sophisticated behavior and make better use of information on cognitive abilities and preferences of opponents. Although we do not find evidence for Nash behavior, observed behaviour is remarkably sophisticated, as almost 80% of subjects behave near optimal and outperform Nash behavior with respect to expected pay-offs.cognitive ability; behaviours; strategic-form games; experiments; preferences; sophistication

    Cognitive Abilities and Labour Market Outcomes

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    We contribute to the literature on the relationship between cognitive abilities and labour market outcomes providing first evidence for Germany. In particular, cross-sectional data from the German Socio-Economic Panel (SOEP) are used, which include two measures of cognitive ability, one test of fluid mechanics (speed test) and another test of crystallised pragmatics (word fluency test). We find a positive relationship between cognitive abilities and economic activity, as workers with high ability test scores are less likely to be unemployed. In addition, results from Mincer-type OLS and 2SLS regressions suggest that mechanics abilities are correlated with wages in a significantly positive way for West German workers, even when educational attainment is controlled for, whereas pragmatics of cognition do not affect earnings significantly. However, we also find that ability and education are inseparable determinants of earnings, which confirms findings of recent studies for other countries.Cognitive ability, earnings regressions, returns to education, ability bias, unemployment probability

    Within-person structures of daily cognitive performance cannot be inferred from between-person structures of cognitive abilities

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    First published online: 09 June 2020Over a century of research on between-person differences has resulted in the consensus that human cognitive abilities are hierarchically organized, with a general factor, termed general intelligence or "g," uppermost. Surprisingly, it is unknown whether this body of evidence is informative about how cognition is structured within individuals. Using data from 101 young adults performing nine cognitive tasks on 100 occasions distributed over six months, we find that the structures of individuals' cognitive abilities vary among each other, and deviate greatly from the modal between-person structure. Working memory contributes the largest share of common variance to both between- and within-person structures, but the g factor is much less prominent within than between persons. We conclude that between-person structures of cognitive abilities cannot serve as a surrogate for within-person structures. To reveal the development and organization of human intelligence, individuals need to be studied over time
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