How people know their risk preference

People differ in their willingness to take risks. Recent work found that revealed preference tasks (e.g., laboratory lotteries)—a dominant class of measures—are outperformed by survey-based stated preferences, which are more stable and predict real-world risk taking across different domains. How can stated preferences, often criticised as inconsequential “cheap talk,” be more valid and predictive than controlled, incentivized lotteries? In our multimethod study, over 3,000 respondents from population samples answered a single widely used and predictive risk-preference question. Respondents then explained the reasoning behind their answer. They tended to recount diagnostic behaviours and experiences, focusing on voluntary, consequential acts and experiences from which they seemed to infer their risk preference. We found that third-party readers of respondents’ brief memories and explanations reached similar inferences about respondents’ preferences, indicating the intersubjective validity of this information. Our results help unpack the self perception behind stated risk preferences that permits people to draw upon their own understanding of what constitutes diagnostic behaviours and experiences, as revealed in high-stakes situations in the real world

Today’s older adults are cognitively fitter than older adults were 20 years ago, but when and how they decline is no different than in the past

History-graded increases in older adults' levels of cognitive performance are well documented, but little is known about historical shifts in within-person change: cognitive decline and onset of decline. We combined harmonized perceptual-motor speed data from independent samples recruited in 1990 and 2010 to obtain 2,008 age-matched longitudinal observations (M = 78 years, 50% women) from 228 participants in the Berlin Aging Study (BASE) and 583 participants in the Berlin Aging Study II (BASE-II). We used nonlinear growth models that orthogonalized within- and between-person age effects and controlled for retest effects. At age 78, the later-born BASE-II cohort substantially outperformed the earlier-born BASE cohort (d = 1.20; 25 years of age difference). Age trajectories, however, were parallel, and there was no evidence of cohort differences in the amount or rate of decline and the onset of decline. Cognitive functioning has shifted to higher levels, but cognitive decline in old age appears to proceed similarly as it did two decades ago