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Relating Cognitive Skills and Personality Traits to Economic Preferences: Decision-Making under Cognitive Shocks and Guessing

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Listed:
  • Cesar Chavez
  • Shuaizhang Feng
  • James J. Heckman
  • Zhe Yang

Abstract

Using rich data on Chinese schoolchildren, we study the relationships of IQ and personality traits with children’s risk preferences and how they affect the precision with which those preferences are measured. Our structural model separates preferences from deliberation noise and guessing, and relates guessing to deliberation noise. Psychological measures have weak direct influences on preferences but strongly affect deliberation noise and guessing behavior. Shocks to choice have persistent individual-specific components and are not independent. Socioeconomic background has little direct influence on preferences or deliberation noise once traits are accounted for. Background variables affect psychological traits, however. Risk preferences differ across and within genders. For small gambles, girls are less risk averse than boys, but the opposite holds for larger gambles.

Suggested Citation

  • Cesar Chavez & Shuaizhang Feng & James J. Heckman & Zhe Yang, 2026. "Relating Cognitive Skills and Personality Traits to Economic Preferences: Decision-Making under Cognitive Shocks and Guessing," NBER Working Papers 35526, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35526
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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