Wednesday, April 06, 2011

Benefits of Rationality

I talked a lot about rationality. Here's why I care:
There is considerable heterogeneity in subjects' consistency scores: high-income and high-education subjects display greater levels of consistency than low-income and low-education subjects, men are more consistent than women, and young subjects are more consistent than older subjects.
And here's why you should care:
We also find that consistency with utility maximization is strongly related to wealth: a standard deviation increase in the consistency score is associated with 15-19 percent more wealth.

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