Aging and Financial Decision Making
Keith Jacks Gamble, Patricia A. Boyle, Lei Yu, David A. Bennett
Management Science · 2015 · Volume 61 · Issue 11
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
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