Research has demonstrated that individual differences in numeracy may have important consequences for decision making. In the present paper, we develop a shorter, psychometrically improved measure of numeracy—the ability to understand, manipulate, and use numerical information, including probabilities. Across two large independent samples that varied widely in age and educational level, participants completed 18 items from existing numeracy measures. In Study 1, we conducted a Rasch analysis on the item pool and created an eight‐item numeracy scale that assesses a broader range of difficulty than previous scales. In Study 2, we replicated this eight‐item scale in a separate Rasch analysis using data from an independent sample. We also found that the new Rasch‐based numeracy scale, compared with previous measures, could predict decision‐making preferences obtained in past studies, supporting its predictive validity. In Study, 3, we further established the predictive validity of the Rasch‐based numeracy scale. Specifically, we examined the associations between numeracy and risk judgments, compared with previous scales. Overall, we found that the Rasch‐based scale was a better linear predictor of risk judgments than prior measures. Moreover, this study is the first to present the psychometric properties of several popular numeracy measures across a diverse sample of ages and educational level. We discuss the usefulness and the advantages of the new scale, which we feel can be used in a wide range of subject populations, allowing for a more clear understanding of how numeracy is associated with decision processes. Copyright © 2012 John Wiley & Sons, Ltd.

Making a risky decision is a complex process that involves evaluation of both the value of the options and the associated risk level. Yet the neural processes underlying these processes have not so far been clearly identified. Using functional magnetic resonance imaging and a task that simulates risky decisions, we found that the dorsal region of the medial prefrontal cortex (MPFC) was activated whenever a risky decision was made, but the degree of this activity across subjects was negatively correlated with their risk preference. In contrast, the ventral MPFC was parametrically modulated by the received gain/loss, and the activation in this region was positively correlated with an individual's risk preference. These results extend existing neurological evidence by showing that the dorsal and ventral MPFC convey different decision signals (i.e., aversion to uncertainty vs. approach to rewarding outcomes), where the relative strengths of these signals determine behavioral decisions involving risk and uncertainty.

While previous research has found that children make more risky decisions than their parents, little is known about the developmental trajectory for the ability to make advantageous decisions. In a sample of children, 5-11 years old, we administered a new risky decision making task in which the relative expected value (EV) of the risky and riskless choice options was varied over trials. Younger children (age 5-7) showed significantly less responsiveness to EV differences than their parents on both trials involving risky gains and trials involving risky losses. For older children (age 8-11) this deficit was smaller overall but was greater on loss trials than on gain trials. Children of both ages made more risky choices than adults when risky choices were disadvantageous. We further analyzed these results in terms of children's ability to utilize probability and outcome information, and discussed them in terms of developing brain structures vital for decision making under uncertainty.