Who Is (More) Rational and Do They Accumulate More Wealth?

Abstract

We report on the results of a large-scale field experiment that enables us to test for consistency with utility-maximizing behavior and to investigate the correlation between individual behavior and demographic and economic characteristics. We conducted the experiment with the CentERpanel (a representative sample of over 2,000 Dutch households), using procedures similar to those used by Choi, et al. (2007b) in a setting with risk. We find a high level of consistency in the individual-level decisions. There is also considerable heterogeneity in subjects’ consistency scores. High-income and high-education subjects display greater levels of consistency. Men are more consistent than women, and young subjects are more consistent than those who are old. Additionally, young and high-education subjects also display a lower rate of violations of monotonicity with respect to first-order stochastic dominance.

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