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Financial Decision Making and Cognition in a Family Context

  • James P. Smith
  • John J. McArdle
  • Robert Willis

In this article, we study the association of cognitive traits and, in particular, numeracy of both spouses on financial outcomes of the family. We find significant effects, particularly for numeracy for financial and non-financial respondents alike, but much larger effects for the financial decision maker in the family. We also examine who makes these financial decisions in the family and why. Once again, cognitive traits such as numeracy are an important component of that decision with larger effects of numeracy for husbands compared to wives. Copyright � 2010 TheAuthor(s). The Economic Journal � 2010 Royal Economic Society.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2010.02394.x
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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 120 (2010)
Issue (Month): 548 (November)
Pages: F363-F380

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Handle: RePEc:ecj:econjl:v:120:y:2010:i:548:p:f363-f380
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  1. Tullio Jappelli, 2010. "Economic Literacy: An International Comparison," Economic Journal, Royal Economic Society, vol. 120(548), pages F429-F451, November.
  2. Smith, J-P, 1997. "Inheritances and Bequests," Papers 97-04, RAND - Labor and Population Program.
  3. John J. McArdle & James P. Smith & Robert Willis, 2011. "Cognition and Economic Outcomes in the Health and Retirement Survey," NBER Chapters, in: Explorations in the Economics of Aging, pages 209-233 National Bureau of Economic Research, Inc.
  4. James Banks & Zoe Oldfield, 2007. "Understanding Pensions: Cognitive Function, Numerical Ability and Retirement Saving," Fiscal Studies, Institute for Fiscal Studies, vol. 28(2), pages 143-170, 06.
  5. James Banks & Cormac O'Dea & Zoë Oldfield, 2010. "Cognitive Function, Numeracy and Retirement Saving Trajectories," Economic Journal, Royal Economic Society, vol. 120(548), pages F381-F410, November.
  6. van den Berg, Gerard J. & Deeg, Dorly J.H. & Lindeboom, Maarten & Portrait, France, 2010. "The role of early-life conditions in the cognitive decline due to adverse events later in life," Working Paper Series 2010:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  7. Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2010. "Financial Knowledge and Financial Literacy at the Household Level," NBER Working Papers 16500, National Bureau of Economic Research, Inc.
  8. James P. Smith, 2004. "Racial and Ethnic Differences in Wealth in the Health and Retirement Study," Labor and Demography 0408011, EconWPA.
  9. Adeline Delavande & Susann Rohwedder & Robert Willis, 2008. "Preparation for Retirement, Financial Literacy and Cognitive Resources," Working Papers wp190, University of Michigan, Michigan Retirement Research Center.
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