Does Cognitive Reflection Relate to Preferences and Socio-Economic Outcomes?

59 Pages Posted: 8 Nov 2023 Last revised: 4 Mar 2024

See all articles by Frank M. Fossen

Frank M. Fossen

University of Nevada, Reno; IZA Institute of Labor Economics

Levent Neyse

German Institute for Economic Research (DIW Berlin); WZB Berlin Social Science Center; IZA Institute of Labor Economics

Carsten Schroeder

German Institute for Economic Research (DIW Berlin); Free University of Berlin (FUB) - Department of Business and Economics

Date Written: February 27, 2024

Abstract

Cognitive abilities are associated with key preferences and socio-economic outcomes. One of the most frequently studied cognitive abilities is cognitive reflection, the ability to avoid intuitive but potentially wrong decisions by switching to a more analytical mindset. Using rich panel data in this pre-registered study, we show that stronger cognitive reflection is significantly associated with more saving and interpersonal trust and find suggestive evidence of a positive relationship with labor income. We do not observe any other statistically significant or suggestive associations with cognitive reflection and therefore cannot confirm previously reported findings concerning risk taking, patience, and social preferences.

Keywords: Cognitive abilities, economic preferences, cognitive reflection, replication, SOEP

JEL Classification: C9, D91, J01

Suggested Citation

Fossen, Frank M. and Neyse, Levent and Schroeder, Carsten, Does Cognitive Reflection Relate to Preferences and Socio-Economic Outcomes? (February 27, 2024). Available at SSRN: https://ssrn.com/abstract=4599840 or http://dx.doi.org/10.2139/ssrn.4599840

Frank M. Fossen

University of Nevada, Reno ( email )

1664 N. Virginia Street
Reno, NV 89557-0030
United States

HOME PAGE: http://business.unr.edu/faculty/ffossen/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=2906

Levent Neyse (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Carsten Schroeder

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Free University of Berlin (FUB) - Department of Business and Economics ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany

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