Raymond Cattell's investment theory

Raymond Cattell (1905-1998) was a very prolific American and British psychologist (he wrote about 500 papers!).  

Cattell was interested both in personality and in cognitive abilities.  He was among the first to use factor analysis.  This   technique helped him develop the 16PF (16 personality factor)  and the BIG5 (the five big factors of personality) theories.  Cattell used factor analysis to explore cognitive abilities, too.  He developed, in collaboration with his colleague HORN, the model which later evolved into CHC theory.  As part of this endeavor he developed investment theory.

Cattell thought, that crystallized knowledge develops through the investment of fluid ability.  According to investment theory, babies are born with fluid ability only, and this is the ability they use during their first encounters and experiences with the world.  The explicit and implicit memories formed in the baby's mind by these encounters and experiences gradually form his reservoir of crystallized knowledge.  From now on, the baby   tackles  each new experience equipped with both fluid ability and crystallized knowledge that he already acquired.  The more knowledge he acquires, the better is his ability to cope with situations he encounters, and the less fluid these situations become.

Thus, the investment of fluid ability creates new crystallized ability, and the existing crystallized ability facilitates coping with new, fluid situations.  This creates a Matthew effect ("the rich get richer").  Children raised in a nurturing home  environment  have a rich and wide knowledge base.  That knowledge base gives them a vantage point in dealing with new, fluid tasks.  For children raised in less fortunate circumstances, many crystallized knowledge tasks become fluid tasks because they lack the relevant knowledge base.

According to investment theory, a person's talents, the effort he makes, his motivation and interests determine where his fluid ability will be invested.  These factors thus determine the specific skills that person will develop (for example, a person could develop his crystallized knowledge in science or literature or music or carpentry). 

The theory also claims, that fluid ability will develop to early adulthood, and then will begin to falter.  Crystallized knowledge, on the other hand, will continue to expand through adulthood.  Schaie's famous research, which combined longitudinal and cross sectional methods to assess the development of cognitive abilities through the life course, confirms this hypothesis.  Crystallized knowledge is the only ability that keeps expanding after the age of fifty.