Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs

Alexander Ludwig, Nils Grevenbrock, Max Groneck and Alexander Zimper

No 14539, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper investigates the roles psychological biases play in deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cog- nitive weakness increase and relative optimism decrease with age. We document that direct measures of cognitive weakness and optimism share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of subjective survival beliefs. Our main finding is that cognitive weakness rather than op- timism is an increasingly important contributor to the well-documented overestimation of survival chances in old age.

Keywords: Subjective survival beliefs; Probability weighting function; Con rmatory bias; Cognition; Optimism; Pessimism (search for similar items in EconPapers)
JEL-codes: D83 D91 I10 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-age, nep-evo and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: COGNITION, OPTIMISM, AND THE FORMATION OF AGE‐DEPENDENT SURVIVAL BELIEFS (2021)
Working Paper: Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (2020)
Working Paper: Cognition, optimism and the formation of age-dependent survival beliefs (2020)
Working Paper: Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (2018)
Working Paper: Cognition, optimism and the formation of age-dependent survival beliefs (2018)
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