Home > Publications . Search All . Browse All . Country . Browse PSC Pubs . PSC Report Series

PSC In The News

RSS Feed icon

Kruger says reports of phantom mobile phone ringing/vibrating more common among anxious

Stafford says too early to say whether stock market declines will curtail Americans' spending

Eisenberg says many colleges now train campus personnel to spot and refer troubled college students

Highlights

Call for papers: Conference on Integrating Genetics and the Social Sciences, Oct 21-22, 2016, CU-Boulder

PRB training program in policy communication for pre-docs. Application deadline, 2.28.2016

Call for proposals: PSID small grants for research on life course impacts on later life wellbeing

PSC News, fall 2015 now available

Next Brown Bag

Monday, Feb 1 at noon, 6050 ISR-Thompson
Sarah Miller

Cognition and Wealth: The Importance of Probabilistic Thinking

Publication Abstract

Download PDF versionLillard, Lee A., and Robert Willis. 2000. "Cognition and Wealth: The Importance of Probabilistic Thinking." PSC Research Report No. 00-455. October 2000.

Proposed reforms of Social Security that expand household choice and private sector trends away from defined benefit pension plans toward defined contribution plans offer new financial planning options. Although these options have many potential benefits for households, critics argue that many people will fail to make choices that exploit them, and, consequently, that expanded choice will increase the risks of poverty for some populations. Subjective probabilities are key in models of optimal financial planning, yet little is known about the capacity of individuals to use probabalistic thinking in this area. In the research reported here, we used a battery of subjective probability questions administered to more than 20,000 people in the Health and Retirement Study to investigate how probabalistic thinking affects portfolio choices and net worth. Our objectives are to develop a measure of competence in probabilistic thinking and to link this measure to risk aversion and financial outcomes.

Dataset(s): Health and Retirement Study

Browse | Search : All Pubs | Next