دانلود رایگان مقاله انگلیسی کاهش شناخت و تصمیمات مالی خانوار در سنین بالاتر - الزویر 2018

ABSTRACT

Using data from the Health and Retirement Study, we examine the association between cognition and financial outcomes among older American couples. We first investigate the relationship between couple members’ cognitive ability and financial responsibility within the household. Our results suggest that differences in the level of cognitive ability play a major role in determining who is the household financial decision-maker, while changes in cognitive ability of both couple members over time only marginally modify such choice. Next, we study changes in financial wealth following pronounced declines in cognitive test scores of household members. We observe significant reductions in wealth among households whose financial decision-maker experiences such declines. Wealth reductions are less sizeable among those with pension/annuity income and receiving help with finances from their children.

6. Conclusions

In this paper, we investigate the relationship between cognition and financial outcomes among older American couples. Specifically, we assess the extent to which cognitive ability and cognitive decline determine financial responsibility within a couple household. We also compare financial wealth trajectories of households whose members experience a noticeable decline in cognition with those of households whose members do not.

We carry out this analysis in a sample drawn from the Health and Retirement Study (HRS). The extensive array of cognitive test scores and demographics available in the HRS, alongside with detailed household asset holding information, allow us to examine how specific skills and abilities shape financial decision making at older ages, to account for multiple confounding factors that might affect this relationship and to check the robustness of our results to alternative measures of financial outcomes.

We find that, within a couple, each member’s cognitive ability does play a role in the selection process leading to designate the person mostly responsible for financial decisions. This role, however, is economically modest once individual time-invariant characteristics are accounted for in fixed-effects regressions. This suggests that differences in the level of cognition between couple members determine who is the financial decision-maker, while changes in cognitive ability over time modify this choice only marginally. Such result is consistent with behavioral inertia or lack of skills of the person who should take on financial tasks previously performed by the partner suffering a relatively faster cognitive aging.