Are Older People Aware of Their Cognitive Decline? Misperception and Financial Decision Making
Additional information
Authors
Mazzonna F.,
Peracchi F.
Type
Journal Article
Year
forthcoming
Language
English
Abstract
We investigate whether older people correctly perceive their own cognitive decline, and the potential financial consequences of misperception. First, we document the fact that older people tend to underestimate their cognitive decline. We then show that those who experienced a severe cognitive decline, but are unaware of it, are more likely to suffer wealth losses compared to those who are aware or did not experience a severe decline. These losses largely reflect decreases in financial wealth and are mainly experienced by wealthier people who were previously active on the stock market. Our findings support the view that financial losses among older people unaware of their cognitive decline are the result of bad financial decisions, not of rational disinvestment strategies.
Journal
Journal of Political Economy (forthcoming)
Start page number
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End page number
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Keywords
Aging, cognitive decline, decision making, HRS
