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

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