Cognitive Skills, Gender and Risk Preferences
AbstractIn this paper 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.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6997.
Length: 29 pages
Date of creation: Nov 2012
Date of revision:
Publication status: published in: Economic Record, 2013, 89 (284),19-30
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Other versions of this item:
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-CBE-2012-12-06 (Cognitive & Behavioural Economics)
- NEP-DEM-2012-12-06 (Demographic Economics)
- NEP-ENT-2012-12-06 (Entrepreneurship)
- NEP-EXP-2012-12-06 (Experimental Economics)
- NEP-NEU-2012-12-06 (Neuroeconomics)
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