Cognitive ability affects the coherence between preference estimates

Cognitive ability describes how people encode and interact with information and has been associated with economic success, physical health, and mental health. In this paper, we highlight the moderating role of cognitive ability on measuring people’s economic preferences—such as their willingness to take risks and endure time delays. We show that the typically low correlation between preference measurement tools increases alongside respondents’ cognitive abilities. We propose two explanations for this finding: 1) People with lower cognitive abilities use simpler strategies in preference elicitation tasks, 2) People’s interpretation of risk differs as a function of their intelligence; when respondents’ subjective interpretation of risk is used as opposed to the normative definition, coherence between measurement tools increased. These results have consequences for both theorists and practitioners who study latent economic preferences and apply them in pursuit of better policy.