Cognitive Abilities and Inflation Expectations

D’Acunto, Francesco; Hoang, Daniel; Paloviita, Maritta; Weber, Michael

doi:10.1257/pandp.20191050

Cited by 77 publications

(41 citation statements)

References 3 publications

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“…However, individual differences in expectancies and their effects on behavior also generated little research within this paradigm. Differences in the content of expectations have recently received attention in behavioral economics (Coibion et al, 2019;D'Acunto et al, 2019aD'Acunto et al, , 2019b, but such models are currently uncommon in psychology.…”

Section: Perceived Consequences Of Behaviormentioning

confidence: 99%

Value-Instantiating Beliefs: A Practical Substitute for Meaning

Ponizovskiy¹

2020

Preprint

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The construct of “meaning”, although commonly used by psychologists, does not have a formal operationalization. In this article I specify a construct of envaluation, intended to quantify individual differences in motivationally relevant aspects of meaning. An envaluation is a personal belief about consequences of an object, action, or event for a personal value. I describe predictors and consequences of envaluations, the role of envaluations in attitude formation, and potential applications of envaluations for research on values, intergroup relations, persuasion, and culture. Using envaluations to assess individual interpretations of psychological stimuli can aid in specifying and testing boundary conditions for psychological effects and improving the predictive power of psychological models. The construct of envaluations can further generate new research directions that address questions about meaning.

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Section: Perceived Consequences Of Behaviormentioning

confidence: 99%

Value-Instantiating Beliefs: A Practical Substitute for Meaning

Ponizovskiy¹

2020

Preprint

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“…Human decision making rests on preferences and cognitive abilities to process information. Cognitive abilities have been addressed, for example, in the realm of inflation expectations (D'Acunto et al 2019), numerical abilities in kindergarten children (Passolunghi et al 2015), environmental awareness (Salahodjaev 2018), and Bolivian forager-farmers with limited schooling (Gurven et al 2017). Among the preferences that are often incorporated in economic models are risk attitude and time preferences (Falk et al 2018).…”

Section: Introductionmentioning

confidence: 99%

Rethinking how risk aversion and impatience are linked with cognitive ability: Experimental findings from agricultural students and farmers

Grüner¹

2021

Preprint

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Dohmen et al. (2010) describe in their paper, which has been published in the American Economic Review, that risk aversion and impatience are negatively related to cognitive ability. This topic is important because controlling for cognitive ability might be necessary if someone is interested in the link of risk preferences or time preferences to real-world outcomes. We re-examine their key results by conducting an experimental study using two subject pools (agricultural students and farmers) and three levels of monetary incentives. Similar to Dohmen et al. (2010), our study finds the above-described negative correlations. However, the strength of the association is smaller and the p-values are quite large.

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“…Recent empirical work echoes this concern by documenting that agents below the top of the distribution by cognitive abilities have more pessimistic expectations and are in general less responsive to economic policies (D'Acunto et al (2019a(D'Acunto et al ( ,b, 2020). Limited cognition has also been described by recent theoretical macro research as a relevant friction to the transmission and effectiveness of monetary policy (Farhi and Werning (2019), Gabaix (2020), Woodford (2018), Angeletos and Sastry (2018)).…”

Section: Introductionmentioning

confidence: 99%

Effective Policy Communication: Targets versus Instruments

et al. 2020

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Communication targeting households and firms has become a stand-alone policy tool of many central banks. But which forms of communication, if any, can reach ordinary people and manage their economic expectations effectively? In a large-scale randomized control trial, we show that communication manages expectations when it focuses on policy targets and objectives rather than on the instruments designed to reach such objectives. It is especially the least sophisticated demographic groups, which central banks typically struggle to reach, who react more to target-based communication. When exposed to target-based communication, these groups are also more likely to believe that policies will benefit households and the economy. Target-based communication enhances policy effectiveness and contributes to strengthen the public's trust in central banks, which is crucial to guarantee the credibility of their policies.

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Cognitive Abilities and Inflation Expectations

Cited by 77 publications

References 3 publications

Value-Instantiating Beliefs: A Practical Substitute for Meaning

Value-Instantiating Beliefs: A Practical Substitute for Meaning

Rethinking how risk aversion and impatience are linked with cognitive ability: Experimental findings from agricultural students and farmers

Effective Policy Communication: Targets versus Instruments

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