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Dementia Risk and Financial Decision Making by Older Households: The Impact of Information

  • Joanne W. Hsu
  • Robert Willis

The cognitive ability needed to manage finances is a form of human capital. Dementias cause progressive declines in cognition. We analyze how information about decline affects the choice of the household financial decision maker using longitudinal data on older couples. We find that as the financial decision maker’s cognition declines, financial management is eventually turned over to the spouse, often well after experiencing difficulties handling money. Couples who control their retirement accounts and are at greatest risk from financial mismanagement are much more likely to shift responsibility to a spouse in response to a diagnosis of memory disease than those with fixed incomes.

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File URL: http://www.jstor.org/stable/pdfplus/10.1086/674105
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File URL: http://www.jstor.org/stable/full/10.1086/674105
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Human Capital.

Volume (Year): 7 (2013)
Issue (Month): 4 ()
Pages: 340 - 377

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Handle: RePEc:ucp:jhucap:doi:10.1086/674105
Contact details of provider: Web page: http://www.journals.uchicago.edu/JHC/

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