The persistence of cognitive biases in financial decisions across economic groups

Kai Ruggeri; Sarah Ashcroft-Jones; Giampaolo Abate Romero Landini; Narjes Al-Zahli; Natalia Alexander; Mathias Houe Andersen; Katherine Bibilouri; Katharina Busch; Valentina Cafarelli; Jennifer Chen; Barbora Doubravová; Tatianna Dugué; Aleena Asfa Durrani; Nicholas Dutra; Eduardo Garcia-Garzon; Christian Gomes; Aleksandra Gracheva; Neža Grilc; Deniz Mısra Gürol; Zoe Heidenry; Clara Hu; Rachel Krasner; Romy Levin; Justine Li; Ashleigh Marie Elizabeth Messenger; Melika Miralem; Fredrik Nilsson; Julia Marie Oberschulte; Takashi Obi; Anastasia Pan; Sun Young Park; Daria Stefania Pascu; Sofia Pelica; Maksymilian Pyrkowski; Katherinne Rabanal; Pika Ranc; Žiga Mekiš Recek; Alexandra Symeonidou; Olivia Symone Tutuska; Milica Vdovic; Qihang Yuan; Friederike Stock

doi:10.1038/s41598-023-36339-2

The persistence of cognitive biases in financial decisions across economic groups

Kai Ruggeri, Sarah Ashcroft-Jones, Giampaolo Abate Romero Landini, Narjes Al-Zahli, Natalia Alexander, Mathias Houe Andersen, Katherine Bibilouri, Katharina Busch, Valentina Cafarelli, Jennifer Chen, Barbora Doubravová, Tatianna Dugué, Aleena Asfa Durrani, Nicholas Dutra, Eduardo Garcia-Garzon, Christian Gomes, Aleksandra Gracheva, Neža Grilc, Deniz Mısra Gürol, Zoe HeidenryClara Hu, Rachel Krasner, Romy Levin, Justine Li, Ashleigh Marie Elizabeth Messenger, Melika Miralem, Fredrik Nilsson, Julia Marie Oberschulte, Takashi Obi, Anastasia Pan, Sun Young Park, Daria Stefania Pascu, Sofia Pelica, Maksymilian Pyrkowski, Katherinne Rabanal, Pika Ranc, Žiga Mekiš Recek, Alexandra Symeonidou, Olivia Symone Tutuska, Milica Vdovic, Qihang Yuan, Friederike Stock

Social Psychology

Research output: Contribution to Journal › Article › Academic › peer-review

Abstract

While economic inequality continues to rise within countries, efforts to address it have been largely ineffective, particularly those involving behavioral approaches. It is often implied but not tested that choice patterns among low-income individuals may be a factor impeding behavioral interventions aimed at improving upward economic mobility. To test this, we assessed rates of ten cognitive biases across nearly 5000 participants from 27 countries. Our analyses were primarily focused on 1458 individuals that were either low-income adults or individuals who grew up in disadvantaged households but had above-average financial well-being as adults, known as positive deviants. Using discrete and complex models, we find evidence of no differences within or between groups or countries. We therefore conclude that choices impeded by cognitive biases alone cannot explain why some individuals do not experience upward economic mobility. Policies must combine both behavioral and structural interventions to improve financial well-being across populations.

Original language	English
Article number	10329
Pages (from-to)	1-11
Number of pages	11
Journal	Scientific Reports
Volume	13
Early online date	26 Jun 2023
DOIs	https://doi.org/10.1038/s41598-023-36339-2
Publication status	Published - 2023

Bibliographical note

Funding

We thank the Junior Researcher Programme, Global Behavioral Science (GLOBES), Department of Psychology, Columbia University; the Centre for Business Research, Judge Business School, University of Cambridge; Corpus Christi College, Cambridge; and Dr Ceren Sönmez, Michal Goldstein, Abby Yucht, and Anastasia Gracheva. This research was supported in part by the National Science Foundation (#2218595) and by Undergraduate Global Engagement at Columbia University. Additional support was provided to individual researchers from the Columbia University Office of the Provost, Masaryk University Centre for International Cooperation, and the Benjamin A. Gilman International Fund from the United States Department of State. This research was funded in part, by the UKRI [MR/N013468/1]. For the purpose of Open Access, the author has applied a CC BY public copyright licence to any Author Accepted Manuscript version arising from this submission. We thank the Junior Researcher Programme, Global Behavioral Science (GLOBES), Department of Psychology, Columbia University; the Centre for Business Research, Judge Business School, University of Cambridge; Corpus Christi College, Cambridge; and Dr Ceren Sönmez, Michal Goldstein, Abby Yucht, and Anastasia Gracheva. This research was supported in part by the National Science Foundation (#2218595) and by Undergraduate Global Engagement at Columbia University. Additional support was provided to individual researchers from the Columbia University Office of the Provost, Masaryk University Centre for International Cooperation, and the Benjamin A. Gilman International Fund from the United States Department of State. This research was funded in part, by the UKRI [MR/N013468/1]. For the purpose of Open Access, the author has applied a CC BY public copyright licence to any Author Accepted Manuscript version arising from this submission.

Funders	Funder number
Centre for Business Research
Columbia University Office of the Provost
Judge Business School
Masaryk University Centre for International Cooperation
National Science Foundation	2218595
U.S. Department of State
Columbia University
UK Research and Innovation	MR/N013468/1
Department of Psychology, Western Washington University
Christ's College, University of Cambridge
University of Cambridge

Keywords

Economic inequality
Cognition
Bias

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10.1038/s41598-023-36339-2

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Ruggeri, K., Ashcroft-Jones, S., Abate Romero Landini, G., Al-Zahli, N., Alexander, N., Andersen, M. H., Bibilouri, K., Busch, K., Cafarelli, V., Chen, J., Doubravová, B., Dugué, T., Durrani, A. A., Dutra, N., Garcia-Garzon, E., Gomes, C., Gracheva, A., Grilc, N., Gürol, D. M., ... Stock, F. (2023). The persistence of cognitive biases in financial decisions across economic groups. Scientific Reports, 13, 1-11. Article 10329. https://doi.org/10.1038/s41598-023-36339-2

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abstract = "While economic inequality continues to rise within countries, efforts to address it have been largely ineffective, particularly those involving behavioral approaches. It is often implied but not tested that choice patterns among low-income individuals may be a factor impeding behavioral interventions aimed at improving upward economic mobility. To test this, we assessed rates of ten cognitive biases across nearly 5000 participants from 27 countries. Our analyses were primarily focused on 1458 individuals that were either low-income adults or individuals who grew up in disadvantaged households but had above-average financial well-being as adults, known as positive deviants. Using discrete and complex models, we find evidence of no differences within or between groups or countries. We therefore conclude that choices impeded by cognitive biases alone cannot explain why some individuals do not experience upward economic mobility. Policies must combine both behavioral and structural interventions to improve financial well-being across populations.",

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Ruggeri, K, Ashcroft-Jones, S, Abate Romero Landini, G, Al-Zahli, N, Alexander, N, Andersen, MH, Bibilouri, K, Busch, K, Cafarelli, V, Chen, J, Doubravová, B, Dugué, T, Durrani, AA, Dutra, N, Garcia-Garzon, E, Gomes, C, Gracheva, A, Grilc, N, Gürol, DM, Heidenry, Z, Hu, C, Krasner, R, Levin, R, Li, J, Messenger, AME, Miralem, M, Nilsson, F, Oberschulte, JM, Obi, T, Pan, A, Park, SY, Pascu, DS, Pelica, S, Pyrkowski, M, Rabanal, K, Ranc, P, Mekiš Recek, Ž, Symeonidou, A, Tutuska, OS, Vdovic, M, Yuan, Q & Stock, F 2023, 'The persistence of cognitive biases in financial decisions across economic groups', Scientific Reports, vol. 13, 10329, pp. 1-11. https://doi.org/10.1038/s41598-023-36339-2

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AU - Al-Zahli, Narjes

AU - Alexander, Natalia

AU - Andersen, Mathias Houe

AU - Bibilouri, Katherine

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AU - Cafarelli, Valentina

AU - Chen, Jennifer

AU - Doubravová, Barbora

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AU - Gürol, Deniz Mısra

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AU - Hu, Clara

AU - Krasner, Rachel

AU - Levin, Romy

AU - Li, Justine

AU - Messenger, Ashleigh Marie Elizabeth

AU - Miralem, Melika

AU - Nilsson, Fredrik

AU - Oberschulte, Julia Marie

AU - Obi, Takashi

AU - Pan, Anastasia

AU - Park, Sun Young

AU - Pascu, Daria Stefania

AU - Pelica, Sofia

AU - Pyrkowski, Maksymilian

AU - Rabanal, Katherinne

AU - Ranc, Pika

AU - Mekiš Recek, Žiga

AU - Symeonidou, Alexandra

AU - Tutuska, Olivia Symone

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AU - Yuan, Qihang

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AB - While economic inequality continues to rise within countries, efforts to address it have been largely ineffective, particularly those involving behavioral approaches. It is often implied but not tested that choice patterns among low-income individuals may be a factor impeding behavioral interventions aimed at improving upward economic mobility. To test this, we assessed rates of ten cognitive biases across nearly 5000 participants from 27 countries. Our analyses were primarily focused on 1458 individuals that were either low-income adults or individuals who grew up in disadvantaged households but had above-average financial well-being as adults, known as positive deviants. Using discrete and complex models, we find evidence of no differences within or between groups or countries. We therefore conclude that choices impeded by cognitive biases alone cannot explain why some individuals do not experience upward economic mobility. Policies must combine both behavioral and structural interventions to improve financial well-being across populations.

KW - Economic inequality

KW - Cognition

KW - Bias

U2 - 10.1038/s41598-023-36339-2

DO - 10.1038/s41598-023-36339-2

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SP - 1

EP - 11

JO - Scientific Reports

JF - Scientific Reports

M1 - 10329

ER -

The persistence of cognitive biases in financial decisions across economic groups

Abstract

Bibliographical note

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Keywords

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