Are high-ability individuals really more tolerant of risk? A test of the relationship between risk aversion and cognitive ability

On the Relationship between Cognitive Ability and Risk Preference

“…First, when considering the results from studies with a range of different sample sizes, the findings indicate that measurement error may be an issue and effect sizes are potentially small. For example, no statistically significant relationship is observed in a number of studies that involve small sample sizes of less than 200 observations (Sousa 2010;Mather et al 2012;Tymula et al 2012;Taylor 2016;Pachur, Mata, and Hertwig 2017). While negative correlations between measures of risk aversion in the gain domain and measures of cognitive ability have been found in particular samples, such as trainee truckers (Burks, Carpenter, Goette, and Rustichini 2009) and college students (Benjamin, Brown, and Shapiro 2013), such correlations tend to be stronger in representative adult population samples (Dohmen et al 2010;Andersson et al 2016).…”

Cognitive abilities and economic behavior

“…As a non-exhaustive list of references, see Andersson et al (2016) , Ballinger et al (2011) , Bayer and Renou (2016b ), Beauchamp et al (2011) , Benjamin et al (2013) , Ben-Ner et al (2004) , Borghans et al (2008) , Brañas-Garza et al (2012) , 2011, 2008 ), Brandstätter and Güth (2002) , Burks et al (2009) , Burnham et al (2009) , Carpenter et al (2013) , Chen et al (2013, 2014) , Cokely and Kelley (2009) , Cubel and Sanchez-Pages (2014) , Dave et al (2010) , Devetag and Warglien (2003) , Dohmen et al (2010) , Fehr and Huck (2015) , Geng et al (2015) , Georganas et al (2015) , Gill and Prowse (2016) , Grimm and Mengel (2012) , Hanaki et al (2016) , Jones (2008, 2014) , Millet and Dewitte (2007) , Oechssler et al (2009) , Palacios-Huerta (2003) , Palacios-Huerta and Volij (2009) , Ponti and Rodriguez-Lara (2015) , Proto et al (2014) , Putterman et al (2011) ,Rydval and Ortmann (2004) ,Schnusenberg and Gallo (2011) , Shamosh et al (2008) ,Stanovich and West (2008) ,Taylor (2016aTaylor ( , 2016b , andToplak et al (2011) .…”

Exploring Different Assumptions about Outcome-Related Risk Perceptions in Discrete Choice Experiments

“…For studies where it is plausible and credible to assume outcome uncertainty and risk varying across policy alternatives, future researchers could design an experiment where the attributes of risk and environmental outcome are presented as one, but allowed to vary independently in the experimental design, and compare the results to those of a design where risk and outcome are presented as two separate attributes to assess the extent of this presentation effect. Second, research has found that heterogeneity in numeracy skills and knowledge about expected values explains part of the noise in risk preference elicitation studies (Dave et al, 2010;Taylor, 2016) and difficulties in comprehending risk information in DCEs (Kjaer et al, 2018). In our experiment, not all respondents may have had the necessary resources (e.g.…”

“…As risk is explicitly stated as an attribute in our DCE, ignoring this attribute can be seen as an indication of heuristic information processing, which can be related to cognitive ability (Kaiser et al, 1999;Akter et al, 2009;Taylor, 2016;Dohmen et al, 2018), environmental attitudes (e.g., pro-environmental individuals may prefer policymakers to apply a precautionary principle instead of a cost-benefit analysis to deal with environmental uncertainty) and socio-demographic characteristics (Dorresteijn, 2017). Through posterior analysis we (15)…”