Financial stress, cognition and vaccine use: Dual-processing and changes in risk preference

Decision-making in economics is largely framed by notions of risk preferences, consumption smoothing and stochastic changes in discounting. However, more recent empirical evidence indicates that direct measures of cognitive processes provide a more nuanced and predictively robust understanding of economic decision-making. The theoretical link between financial stress, changes in cognitive capacity and economic decision-making has become clearer due to the strong association between cognition and dual-processing theory. A need exists to better understand the potentially dynamic role of cognition on economic decision-making, particularly in low-income settings where poverty and associated financial stress are most prevalent. A short, unbalanced panel is used to estimate the effects of changing financial stress on household livestock expenditure in rural Kenya. Estimated negative changes in heuristic use on changes in livestock and educational expenditure provide further empirical evidence of the effect of changes in cognition on economic decision-making.