Financial Decision Making and Cognition in a Family Context

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...

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Bibliographic Details
Published in:The Economic journal (London) 2010-11, Vol.120 (548), p.F363-F380
Main Authors: Smith, James P., McArdle, John J., Willis, Robert
Format: Article
Language:English
Subjects:
Age
Cognition
Cognition & reasoning
Cognitive ability
Correlation analysis
Couples
Decision making
Economics
Family relations
Family studies
FEATURE: COGNITIVE FUNCTION, FINANCIAL LITERACY AND FINANCIAL OUTCOMES AT OLDER AGES
Financial literacy
Fluid and crystallized intelligence
Household wealth
Husbands
Investment planning
Investment returns
Investment strategies
Memory
Numeracy
Personal finance
Portfolio management
Portfolio performance
Spouses
Studies
Wealth
Wives
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Summary: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.
ISSN:0013-0133
1468-0297
DOI:10.1111/j.1468-0297.2010.02394.x