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Economic conditions at the time of birth and cognitive abilities late in life: evidence from eleven European countries

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Author Info

  • Doblhammer, Gabriele

    (University of Rostock)

  • van den Berg, Gerard J.

    ()
    (IFAU - Institute for Labour Market Policy Evaluation)

  • Fritze, Thomas

    (German Center for Neurodegenerative Diseases (DZNE))

Abstract

With ageing populations and a stronger reliance on individual financial decision-making concerning asset portfolios, retirement schemes, pensions and insurances, it becomes increasingly important to understand the determinants of cognitive ability among the elderly. To study effects of the early-life economic environment, macro-economic fluctuations may be used. In European countries, about three to four economic recession and boom periods occurred between 1900 and 1945. The timing of these periods differs across countries. We apply data from the Survey of Health, Aging and Retirement in Europe (SHARE) among elderly individuals. This survey is homogeneous across countries. We use almost 20,000 respondents from 11 countries. We examine several domains of cognitive functioning at ages 60+ and link them to the macro-economic deviations in the year of birth, controlling for demographic, socioeconomic and health status. We find that economic conditions at birth significantly influence cognitive functioning late in life in various domains. The effects are particularly pronounced among the less educated. Recessions negatively influence numeracy and verbal fluency as well as the score on the omnibus cognitive indicator. The results are robust; controlling for current characteristics does not change effect sizes and significance. We discuss possible causal pathways.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2011:14.

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Length: 47 pages
Date of creation: 30 Sep 2011
Date of revision:
Handle: RePEc:hhs:ifauwp:2011_014

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Keywords: Cognition; economic business cycle; developmental origins; health; long-run effects; dementia; numeracy; memory; decision-making;

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References

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  1. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," NBER Working Papers 13810, National Bureau of Economic Research, Inc.
  2. Gordon B. Dahl & Lance Lochner, 2010. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20105, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  3. In Utero, 2006. "Is the 1918 Influenza Pandemic Over? Long-Term Effects of In Utero Influenza Exposure in the Post-1940 U.S. Population," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 672-712, August.
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  6. Anne Case & Christina Paxson, 2009. "Early Life Health and Cognitive Function in Old Age," American Economic Review, American Economic Association, vol. 99(2), pages 104-09, May.
  7. Dimitrios Christelis & Tullio Jappelli & Mario Padula, 2006. "Cognitive Abilities and Portfolio Choice," CSEF Working Papers 157, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  8. James P. Smith & John J. McArdle & Robert Willis, 2010. "Financial Decision Making and Cognition in a Family Context," Working Papers 785, RAND Corporation Publications Department.
  9. James Banks & Zoe Oldfield, 2007. "Understanding Pensions: Cognitive Function, Numerical Ability and Retirement Saving," Fiscal Studies, Institute for Fiscal Studies, vol. 28(2), pages 143-170, 06.
  10. Gerard J. van den Berg & Gabriele Doblhammer-Reiter & Kaare Christensen, 2008. "Exogenous determinants of early-life conditions, and mortality later in life," MPIDR Working Papers WP-2008-016, Max Planck Institute for Demographic Research, Rostock, Germany.
  11. Gerard J. van den Berg & Maarten Lindeboom & France Portrait, 2006. "Economic Conditions Early in Life and Individual Mortality," American Economic Review, American Economic Association, vol. 96(1), pages 290-302, March.
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Cited by:
  1. Beck, Audrey N. & Finch, Brian K. & Lin, Shih-Fan & Hummer, Robert A. & Masters, Ryan K., 2014. "Racial disparities in self-rated health: Trends, explanatory factors, and the changing role of socio-demographics," Social Science & Medicine, Elsevier, vol. 104(C), pages 163-177.

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