Cognitive ability and financial fraud victimization
利用瑞典公共养老金系统中欺诈基金的投资数据，发现认知能力与投资欺诈基金的可能性呈强负相关，其中语言能力尤为关键。
This paper examines the role of cognitive ability in protecting individuals from financial fraud. We analyze fraud that targets retirement savings in the Swedish public pension system, where several fund companies were expelled for misconduct. Some of these firms then faced criminal investigations that led to prison sentences. Investors in these fraudulent funds experienced both direct losses from the failure to recover misappropriated funds and indirect losses due to poor fund performance and high fees. Using administrative data on fund selections in the Swedish pension system, linked with cognitive ability test scores from military enlistment, we find a nearly linear, strongly negative relationship between cognitive ability and the likelihood of investing in these fraudulent firms. Verbal skills, in particular, play a critical role in protecting savers from fraud, and we ensure that our results are not confounded by a general propensity of low-ability individuals to end up in poorer-performing funds.