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Financial Decision Making and Cognition in a Family Context

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

In this paper, the authors studied the association of cognitive traits and in particular numeracy of both spouses on financial outcomes of the family. They found significant effects, particularly for numeracy for financial and non-financial respondents alike, but much larger effects for the financial decision maker in the family. They also examined who makes these financial decisions in the family and why. Once again, cognitive traits such as numeracy were an important component of that decision with larger effects of numeracy for husbands compared to wives.

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Paper provided by RAND Corporation Publications Department in its series Working Papers with number 785.

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Length: 38 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:ran:wpaper:785
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  1. Jappelli, Tullio, 2010. "Economic literacy: An international comparison," CFS Working Paper Series 2010/16, Center for Financial Studies (CFS).
  2. 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.
  3. 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," IZA Discussion Papers 4780, Institute for the Study of Labor (IZA).
  4. 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.
  5. 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.
  6. Smith, J.P., 1996. "Racial and Ethnic Differences in Wealth in the Health and Retirement Study," Papers 96-12, RAND - Reprint Series.
  7. 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.
  8. Smith, J-P, 1997. "Inheritances and Bequests," Papers 97-04, RAND - Labor and Population Program.
  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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