Aging and Financial Decision Making

Keith Jacks Gamble (), Patricia A. Boyle (), Lei Yu () and David A. Bennett ()
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Keith Jacks Gamble: Driehaus College of Business, DePaul University, Chicago, Illinois 60604
Patricia A. Boyle: Rush Alzheimer’s Disease Center, Rush University Medical Center, Chicago, Illinois 60612
Lei Yu: Rush Alzheimer’s Disease Center, Rush University Medical Center, Chicago, Illinois 60612
David A. Bennett: Rush Alzheimer’s Disease Center, Rush University Medical Center, Chicago, Illinois 60612

Management Science, 2015, vol. 61, issue 11, 2603-2610

Abstract: This study examines how cognitive changes associated with aging impact the financial decision-making capability of older Americans. We find that a decrease in cognition is associated with a decrease in financial literacy. Decreases in episodic memory and visuospatial ability are associated with a decrease in numeracy, and a decrease in semantic memory is associated with a decrease in financial knowledge. A decrease in cognition also predicts a drop in self-confidence in general, but importantly, it is not associated with a drop in confidence in managing one’s own finances. Participants experiencing decreases in cognition do show an increased likelihood of getting help with financial decisions; however, many participants experiencing significant drops in cognition still do not get help. This paper was accepted by Teck-Hua Ho, behavioral economics .

Keywords: economics; behavior and behavioral decision making; microeconomic behavior; finance; aging; financial literacy; retirement (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (26)

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