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Aging and Financial Decision Making

Author

Listed:
  • 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)

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 .

Suggested Citation

  • Keith Jacks Gamble & Patricia A. Boyle & Lei Yu & David A. Bennett, 2015. "Aging and Financial Decision Making," Management Science, INFORMS, vol. 61(11), pages 2603-2610, November.
    • Handle: RePEc:inm:ormnsc:v:61:y:2015:i:11:p:2603-2610
    DOI: 10.1287/mnsc.2014.2010
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    References listed on IDEAS

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