Smart people know how the economy works: Cognitive ability, economic knowledge and financial literacy

Cognitive ability correlates positively with many financial outcomes but why? One important relationship to understand is the degree which cognitive associated greater knowledge of economics, this has not been tested extensively. Here in two large, pre-registered studies ( N = 1356), we between and both economic literacy. Three predictions were key: i) would show a large positive association knowledge; ii) be better literacy iii) Greater All three supported replicated. predicted r 0.37 0.52) independent much larger effects than either educational attainment or economics courses. The findings extend general include awareness functions, improved use information improves lifetime wellbeing. • Tested if drives Ability strongly knowledge. Effects on mediated by Associations influenced education training.