Premium
DISCOUNTING, COGNITION, AND FINANCIAL AWARENESS: NEW EVIDENCE FROM A CHANGE IN THE MILITARY RETIREMENT SYSTEM
Author(s) -
Simon Curtis J.,
Warner John T.,
Pleeter Saul
Publication year - 2015
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12146
Subject(s) - discounting , cash , pension , payment , economics , cognition , financial literacy , test (biology) , variety (cybernetics) , actuarial science , finance , psychology , computer science , paleontology , neuroscience , artificial intelligence , biology
The choice given military personnel between an immediate cash payment of $30,000 or a more generous retirement pension permits us to estimate individuals' personal discount rates ( PDRs ). The resulting PDRs , about 7% for enlisted personnel and 2%–4.3% for officers, are precise and are correlated with a variety of other financial behaviors. The PDR is negatively related to educational attainment and the Armed Forces Qualification Test, but cognition seems to operate through channels other than being better informed; better‐informed individuals were not always measured to be more patient . ( JEL D91, D14)