IDEAS home Printed from https://ideas.repec.org/p/hrv/faseco/9938145.html
   My bibliography  Save this paper

Cognitive Function Is Associated with Risk Aversion in Community-Based Older Persons

Author

Listed:
  • Boyle, Patricia A.
  • Yu, Lei
  • Buchman, Aron S.
  • Laibson, David I.
  • Bennett, David A.

Abstract

Background: Emerging data from younger and middle-aged persons suggest that cognitive ability is negatively associated with risk aversion, but this association has not been studied among older persons who are at high risk of experiencing loss of cognitive function. Methods: Using data from 369 community-dwelling older persons without dementia from the Rush Memory and Aging Project, an ongoing longitudinal epidemiologic study of aging, we examined the correlates of risk aversion and tested the hypothesis that cognition is negatively associated with risk aversion. Global cognition and five specific cognitive abilities were measured via detailed cognitive testing, and risk aversion was measured using standard behavioral economics questions in which participants were asked to choose between a certain monetary payment ($15) versus a gamble in which they could gain more than $15 or gain nothing; potential gamble gains ranged from $21.79 to $151.19 with the gain amounts varied randomly over questions. We first examined the bivariate associations of age, education, sex, income and cognition with risk aversion. Next, we examined the associations between cognition and risk aversion via mixed models adjusted for age, sex, education, and income. Finally, we conducted sensitivity analyses to ensure that our results were not driven by persons with preclinical cognitive impairment. Results: In bivariate analyses, sex, education, income and global cognition were associated with risk aversion. However, in a mixed effect model, only sex (estimate = -1.49, standard error (SE) = 0.39, p

Suggested Citation

  • Boyle, Patricia A. & Yu, Lei & Buchman, Aron S. & Laibson, David I. & Bennett, David A., 2011. "Cognitive Function Is Associated with Risk Aversion in Community-Based Older Persons," Scholarly Articles 9938145, Harvard University Department of Economics.
    • Handle: RePEc:hrv:faseco:9938145
    as

    Download full text from publisher

    File URL: http://dash.harvard.edu/bitstream/handle/1/9938145/cognitive_function.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2010. "Are Risk Aversion and Impatience Related to Cognitive Ability?," American Economic Review, American Economic Association, vol. 100(3), pages 1238-1260, June.
    2. repec:feb:framed:0074 is not listed on IDEAS
    3. Anderson, Lisa R. & Mellor, Jennifer M., 2008. "Predicting health behaviors with an experimental measure of risk preference," Journal of Health Economics, Elsevier, vol. 27(5), pages 1260-1274, September.
    4. Miles S. Kimball & Claudia R. Sahm & Matthew D. Shapiro, 2009. "Risk Preferences in the PSID: Individual Imputations and Family Covariation," American Economic Review, American Economic Association, vol. 99(2), pages 363-368, May.
    5. Robert B. Barsky & F. Thomas Juster & Miles S. Kimball & Matthew D. Shapiro, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 537-579.
    6. Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2013. "Who Is ‘Behavioral’? Cognitive Ability And Anomalous Preferences," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1231-1255, December.
    7. Glenn W Harrison & John A List & Charles Towe, 2007. "Naturally Occurring Preferences and Exogenous Laboratory Experiments: A Case Study of Risk Aversion," Econometrica, Econometric Society, vol. 75(2), pages 433-458, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:cup:judgdm:v:14:y:2019:i:5:p:591-604 is not listed on IDEAS
    2. Almeida, Sergio, 2019. "Do as I Do, Not as I Say: Incentivization and the Relationship Between Cognitive Ability and Risk Aversion," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 73(4), December.
    3. Clare Andrews & Daniel Nettle & Sophie Reichert & Tom Bedford & Pat Monaghan & Melissa Bateson, 2018. "A marker of biological ageing predicts adult risk preference in European starlings, Sturnus vulgaris," Behavioral Ecology, International Society for Behavioral Ecology, vol. 29(3), pages 589-597.
    4. Thomas Meissner & Xavier Gassmann & Corinne Faure & Joachim Schleich, 2023. "Individual characteristics associated with risk and time preferences: A multi country representative survey," Journal of Risk and Uncertainty, Springer, vol. 66(1), pages 77-107, February.
    5. Boyle, Patricia A & Yu, Lei & Segawa, Eisuke & Wilson, Robert S & Buchman, Aron S & Laibson, David I. & Bennett, David A, 2012. "Association of cognition with temporal discounting in community based older persons," Scholarly Articles 11726269, Harvard University Department of Economics.
    6. Bryan D James & Patricia A Boyle & Lei Yu & S Duke Han & David A Bennett, 2015. "Cognitive Decline Is Associated with Risk Aversion and Temporal Discounting in Older Adults without Dementia," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-12, April.
    7. Muhammad Sajid & Matthew C. Li, 2019. "The role of cognitive reflection in decision making: Evidence from Pakistani managers," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(5), pages 591-604, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bryan D James & Patricia A Boyle & Lei Yu & S Duke Han & David A Bennett, 2015. "Cognitive Decline Is Associated with Risk Aversion and Temporal Discounting in Older Adults without Dementia," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-12, April.
    2. Fossen, Frank M. & Glocker, Daniela, 2017. "Stated and revealed heterogeneous risk preferences in educational choice," European Economic Review, Elsevier, vol. 97(C), pages 1-25.
    3. Liran Einav & Amy Finkelstein & Iuliana Pascu & Mark R. Cullen, 2012. "How General Are Risk Preferences? Choices under Uncertainty in Different Domains," American Economic Review, American Economic Association, vol. 102(6), pages 2606-2638, October.
    4. Gerhardt, Holger & Schildberg-Hörisch, Hannah & Willrodt, Jana, 2017. "Does self-control depletion affect risk attitudes?," European Economic Review, Elsevier, vol. 100(C), pages 463-487.
    5. Menkhoff, Lukas & Sakha, Sahra, 2017. "Estimating risky behavior with multiple-item risk measures," Journal of Economic Psychology, Elsevier, vol. 59(C), pages 59-86.
    6. Menkhoff, Lukas & Sakha, Sahra, 2014. "Multiple-item risk measures," Kiel Working Papers 1980, Kiel Institute for the World Economy (IfW Kiel).
    7. Jonathan P. Beauchamp & David Cesarini & Magnus Johannesson, 2017. "The psychometric and empirical properties of measures of risk preferences," Journal of Risk and Uncertainty, Springer, vol. 54(3), pages 203-237, June.
    8. Herrmann, Tabea & Hübler, Olaf & Menkhoff, Lukas & Schmidt, Ulrich, 2016. "Allais for the poor," Kiel Working Papers 2036, Kiel Institute for the World Economy (IfW Kiel).
    9. Insoo Cho & Peter F. Orazem, 2021. "How endogenous risk preferences and sample selection affect analysis of firm survival," Small Business Economics, Springer, vol. 56(4), pages 1309-1332, April.
    10. Luigi Guiso, 2015. "A Test of Narrow Framing and its Origin," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(1), pages 61-100, March.
    11. Luc Arrondel & André Masson, 2013. "Measuring savers' preferences how and why?," PSE Working Papers halshs-00834203, HAL.
    12. Sarah Jacobson & Ragan Petrie, 2009. "Learning from mistakes: What do inconsistent choices over risk tell us?," Journal of Risk and Uncertainty, Springer, vol. 38(2), pages 143-158, April.
    13. Jonathan Chapman & Erik Snowberg & Stephanie Wang & Colin Camerer, 2018. "Loss Attitudes in the U.S. Population: Evidence from Dynamically Optimized Sequential Experimentation (DOSE)," NBER Working Papers 25072, National Bureau of Economic Research, Inc.
    14. Armin Falk & Anke Becker & Thomas Dohmen & Benjamin Enke & David Huffman & Uwe Sunde, 2018. "Global Evidence on Economic Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(4), pages 1645-1692.
    15. Armin Falk & Fabian Kosse & Pia Pinger & Hannah Schildberg-Hörisch & Thomas Deckers, 2021. "Socioeconomic Status and Inequalities in Children’s IQ and Economic Preferences," Journal of Political Economy, University of Chicago Press, vol. 129(9), pages 2504-2545.
    16. Jose Apesteguia & Miguel Angel Ballester, 2014. "Discrete Choice Estimation of Risk Aversion," Working Papers 788, Barcelona School of Economics.
    17. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2018. "On the Relationship between Cognitive Ability and Risk Preference," Journal of Economic Perspectives, American Economic Association, vol. 32(2), pages 115-134, Spring.
    18. repec:cup:judgdm:v:14:y:2019:i:3:p:234-279 is not listed on IDEAS
    19. repec:use:tkiwps:2323 is not listed on IDEAS
    20. Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, May.
    21. Jonathan Cohen & Keith Marzilli Ericson & David Laibson & John Myles White, 2020. "Measuring Time Preferences," Journal of Economic Literature, American Economic Association, vol. 58(2), pages 299-347, June.
    22. Cho, In Soo & Orazem, Peter, 2011. "Risk Aversion or Risk Management?: How Measures of Risk Aversion Affect Firm Entry and Firm Survival," Staff General Research Papers Archive 34162, Iowa State University, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hrv:faseco:9938145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Office for Scholarly Communication (email available below). General contact details of provider: https://edirc.repec.org/data/deharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.