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Smart People Make Wise Economic Choices

People with higher measures of cognitive ability are more likely to make good choices in several different types of economic decisions.

A University of Minnesota study, set to be published online in the Proceedings of the National Academy of Sciences, was conducted with 1,000 trainee truck drivers at Schneider National, Inc., an American motor carrier employing 20,000.

The researchers measured the trainees’ cognitive skills and asked them to make choices in several economic experiments, and then followed them on the job.

People with better cognitive skills, in particular higher IQ, were more willing to take calculated risks and to save their money and made more consistent choices.

They were also more likely to be cooperative in a strategic situation, and exhibited higher “social awareness” in that they more accurately forecast others’ behavior.

The researchers also tracked how trainees persevered on their new job. The company paid for the training of those who stayed a year, but those who left early owed thousands in training costs. The study found that those with the highest level of cognitive ability stayed at twice the rate of those with the lowest.

The finding that individual characteristics that improve economic success — patience, risk taking and effective social behavior — all cluster together and are linked through cognitive skill could have implications for policy making and education.

“These results could shed light on the causes of differential economic success among individuals and among nations,” said University of Minnesota-Twin Cities economist Aldo Rustichini, a co-author whose theoretical work on cognitive skills is used in the paper.

“It also suggests that the benefit from early childhood education programs not only affects cognitive skills, but extends to more effective economic decision-making,” said study co-author Stephen Burks, the University of Minnesota-Morris economist who organized the project that gathered the data.

Source: University of Minnesota

Smart People Make Wise Economic Choices

Rick Nauert PhD

Rick Nauert, PhDDr. Rick Nauert has over 25 years experience in clinical, administrative and academic healthcare. He is currently an associate professor for Rocky Mountain University of Health Professionals doctoral program in health promotion and wellness. Dr. Nauert began his career as a clinical physical therapist and served as a regional manager for a publicly traded multidisciplinary rehabilitation agency for 12 years. He has masters degrees in health-fitness management and healthcare administration and a doctoral degree from The University of Texas at Austin focused on health care informatics, health administration, health education and health policy. His research efforts included the area of telehealth with a specialty in disease management.

APA Reference
Nauert PhD, R. (2015). Smart People Make Wise Economic Choices. Psych Central. Retrieved on May 22, 2018, from https://psychcentral.com/news/2009/04/28/smart-people-make-wise-economic-choices/5563.html

 

Scientifically Reviewed
Last updated: 6 Oct 2015
Last reviewed: By John M. Grohol, Psy.D. on 6 Oct 2015
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