Cognitive Reflection and Decision Making

People with higher cognitive ability (or "IQ") differ from those with lower cognitive ability in a variety of important and unimportant ways. On average, they live longer, earn more, have larger working memories, faster reaction times and are more susceptible to visual illusions (Jensen, 1998). Despite the diversity of phenomena related to IQ, few have attempted to understand-or even describe-its influences on judgment and decision making. Studies on time preference, risk preference, probability weighting, ambiguity aversion, endowment effects, anchoring and other widely researched topics rarely make any reference to the possible effects of cognitive abilities (or cognitive traits).

Decision researchers may neglect cognitive ability because they are more interested in the average effect of some experimental manipulation. On this view, individual differences (in intelligence or anything else) are regarded as a nuisance-as just another source of "unexplained" variance. Second, most studies are conducted on college undergraduates, who are widely perceived as fairly homogenous. Third, characterizing performance differences on cognitive tasks requires terms ("IQ" and "aptitudes" and such) that many object to because of their association with discriminatory policies. In short, researchers may be reluctant to study something they do not find interesting, that is not perceived to vary much within the subject pool conveniently obtained, and that will just get them into trouble anyway.

But as Lubinski and Humphreys (1997) note, a neglected aspect does not cease to operate because it is neglected, and there is no good reason for ignoring the possibility that general intelligence or various more specific cognitive abilities are important causal determinants of decision making. To provoke interest in this neglected topic, this paper introduces a three-item "Cognitive Reflection Test" (CRT) as a simple measure of one type of cognitive ability. I will show that CRT scores are predictive of the types of choices that feature prominently in tests of decision-making theories, like expected utility theory and prospect theory. Indeed, the relation is sometimes so strong that the preferences themselves effectively function as expressions of cognitive ability-an empirical fact begging for a theoretical explanation.

After introducing the CRT, I examine its relations with two important decision-making characteristics: time preference and risk preference. The CRT is then compared with other measures of cognitive ability or cognitive "style," including the Wonderlic Personnel Test...