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Cognitive Skills, Gender and Risk Preferences
Author(s) -
Booth Alison L.,
Katic Pamela
Publication year - 2013
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/1475-4932.12014
Subject(s) - lottery , proxy (statistics) , psychology , framing (construction) , cognition , affect (linguistics) , developmental psychology , percentile , cohort , framing effect , social psychology , demography , economics , medicine , sociology , microeconomics , geography , computer science , machine learning , neuroscience , persuasion , archaeology , statistics , mathematics , communication
In this study, we utilise data from a unique new birth‐cohort study to see how the risk preferences of young people are affected by cognitive skills and gender. We find that cognitive ability (measured by the percentile ranking for university entrance at age 18) has no effect on risk preferences measured at age 20. This is in contrast to experimental studies that use IQ measures to proxy cognitive skills. However, we do find that gender matters. While young women are significantly more likely than young men to assess themselves as being prepared to take risks, women choose to invest significantly less when they are confronted with a clearly specified investment decision based on hypothetical lottery winnings. This difference between the impact of gender on risk attitudes and the hypothetical lottery investment suggests that impatience and framing affect young women and men differently.