Dementia Risk and Financial Decision Making by Older Households: The Impact of Information
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.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael A. Boozer & Tomas J. Philipson, 2000. "The Impact of Public Testing for Human Immunodeficiency Virus," Journal of Human Resources, University of Wisconsin Press, vol. 35(3), pages 419-446.
- Adeline Delavande & Susann Rohwedder & Robert Willis, 2008. "Preparation for Retirement, Financial Literacy and Cognitive Resources," Working Papers wp190, University of Michigan, Michigan Retirement Research Center.
- Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2013.
"Who Is ‘Behavioral’? Cognitive Ability And Anomalous Preferences,"
Journal of the European Economic Association,
European Economic Association, vol. 11(6), pages 1231-1255, December.
- Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2006. "Who is “Behavioral”? Cognitive Ability and Anomalous Preferences," Levine's Working Paper Archive 122247000000001334, David K. Levine.
- James Banks & Zoë Oldfield, 2006.
"Understanding pensions: cognitive function, numerical ability and retirement saving,"
IFS Working Papers
W06/05, Institute for Fiscal Studies.
- 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.
- Laibson, David I. & Agarwal, Sumit & Driscoll, John C. & Gabaix, Xavier, 2009. "The Age of Reason: Financial Decisions over the Life-Cycle with Implications for Regulation," Scholarly Articles 4554335, Harvard University Department of Economics.
- James P. Smith & John J. McArdle & Robert Willis, 2010.
"Financial Decision Making and Cognition in a Family Context,"
Royal Economic Society, vol. 120(548), pages F363-F380, November.
- 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.
- James Banks & Cormac O'Dea & Zoë Oldfield, 2010. "Cognitive Function, Numeracy and Retirement Saving Trajectories," Economic Journal, Royal Economic Society, vol. 120(548), pages F381-F410, November.
- Rebecca L. Thornton, 2008. "The Demand for, and Impact of, Learning HIV Status," American Economic Review, American Economic Association, vol. 98(5), pages 1829-63, December.
- Koszegi, Botond, 2003. "Health anxiety and patient behavior," Journal of Health Economics, Elsevier, vol. 22(6), pages 1073-1084, November.
- Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory and Anticipatory Feelings," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 55-79.
- Sumit Agarwal & John C. Driscoll & Xavier Gabaix & David Laibson, 2009. "The Age of Reason: Financial Decisions over the Life Cycle and Implications for Regulation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(2 (Fall)), pages 51-117.
- Eileen M. Crimmins & Jung Ki Kim & Kenneth M. Langa & David R. Weir, 2011. "Assessment of Cognition Using Surveys and Neuropsychological Assessment: The Health and Retirement Study and the Aging, Demographics, and Memory Study," Journals of Gerontology: Series B, Gerontological Society of America, vol. 66(suppl_1), pages i162-i171.
When requesting a correction, please mention this item's handle: RePEc:ucp:jhucap:doi:10.1086/674105. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)
If references are entirely missing, you can add them using this form.