Research note: Age, retirement, and intertemporal resource decision ability

Craig Carpenter, Scott Loveridge and Maureen Mickus

Journal of Consumer Affairs, 2021, vol. 55, issue 2, 542-555

Abstract: Population studies show the importance of active aging for maintaining cognitive health, but much of the research has focused on episodic memory and verbal skills. Aging and ability to make rational intertemporal financial decisions is less understood, despite its critical role in consumer finance. This study describes the relationship between age, retirement, and intertemporal decision ability. A survey of adults examines the interplay of aging and retirement related to completing simple calculations with time trade‐offs in benefits. A negative association between intertemporal skills and age is indicated, with a sharp downward inflection around age 66. Regression analysis results in a significant, negative retirement‐age interaction term. This research has implications for policy and consumer decision‐making. The negative relationship of age and retirement status may suggest limits to career extension, or alternatively, that extending some types of careers could provide cognitive benefits. Further research is needed to understand the direction of causality.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jconsa:v:55:y:2021:i:2:p:542-555

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