Financial Decision Making and Cognition in a Family Context


  • We thank Iva MacLennan and David Rumpel for excellent programming assistance. This research was supported by grants (AG025529 and AG008291) from the National Institute of Aging to the RAND Corporation, to the University of Southern California (AG07137) and to the University of Michigan (AG026571).

Corresponding author: James P. Smith, The RAND Corporation, 1776 Main Street, PO Box 2138, Santa Monica, CA 90407-2138, USA. Email:


In this article, we study the association of cognitive traits and, in particular, numeracy of both spouses on financial outcomes of the family. We find significant effects, particularly for numeracy for financial and non-financial respondents alike, but much larger effects for the financial decision maker in the family. We also examine who makes these financial decisions in the family and why. Once again, cognitive traits such as numeracy are an important component of that decision with larger effects of numeracy for husbands compared to wives.