Document Type

Article

Publication Date

9-2017

Keywords

financial preparedness, decision making, cognitive reflection, financial literacy

Abstract

Social science, more than ever, is drawing upon the insights of personality psychology. Though researchers now know that noncognitive skills and personality traits, such as conscientiousness, grit, self-control, or a growth mindset could be important for life outcomes, they struggle to find reliable measures of these skills. Self-reports are often used for analysis, but these measures have been found to be affected by important biases. We study the validity of innovative, more robust measures of noncognitive skills based on performance tasks. Our first proposed measure is an adaptation, for the adult population, of the Academic Diligence Task (ADT) developed and validated among students by Galla et al. (2014). For our second type of performance task measures of noncognitive skills, we argue that questionnaires themselves can be seen as performance tasks, such that measures of survey effort, e.g. item non-response rates and degree of carelessness in answering, could lead to meaningful measures of noncognitive skills. New measures along with self-reports are then used to study the role of noncognitive skills and personality traits on an individual’s preparation for retirement and financial capability. In a world where individuals are increasingly asked to take responsibility for retirement preparations and when available financial products to do so are growing in sophistication, a better understanding of how noncognitive skills influence retirement preparation could help effective policy design.

Series Title

MRRC Working Paper

Series Number

2017-365

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