Understanding cognitive decline in older ages: The role of health shocks

Valentin Schiele and Hendrik Schmitz

European Economic Review, 2023, vol. 151, issue C

Abstract: Individual cognitive functioning declines over time. We seek to understand how adverse physical health shocks in older ages contribute to this development. By use of event-study methods and data from the USA, England, and several countries in Continental Europe, we find evidence that health shocks lead to an immediate and persistent decline in cognitive functioning. This robust finding holds in all regions representing different health insurance systems and seems to be independent of underlying individual demographic characteristics such as sex and age. We also ask whether variables that are susceptible to policy action can reduce the negative consequences of a health shock. Our results suggest that neither compulsory education nor retirement regulations moderate the effects, thus emphasizing the importance for cognitive functioning of maintaining good physical health in old age.

Keywords: Cognitive decline; Health shocks; Retirement; Education; Event study (search for similar items in EconPapers)
JEL-codes: I1 I12 J14 J24 J26 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:151:y:2023:i:c:s0014292122002008

DOI: 10.1016/j.euroecorev.2022.104320

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