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

Abstract

ABSTRACT Dohmen et al. (2010) find in their paper (‘Are Risk Aversion and Impatience Related to Cognitive Ability?'), 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 relatively small in the realm of risk aversion and negligible with impatience.