IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/doi10.1086-728697.html

Are Older People Aware of Their Cognitive Decline? Misperception and Financial Decision-Making

Author

Listed:
  • Fabrizio Mazzonna
  • Franco Peracchi

Abstract

We investigate whether older people correctly perceive their cognitive decline and the potential financial consequences of misperception. First, we show that older people tend to underestimate their cognitive decline. We then show that those experiencing a severe decline but unaware of it are more likely to suffer wealth losses. 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.

Suggested Citation

  • Fabrizio Mazzonna & Franco Peracchi, 2024. "Are Older People Aware of Their Cognitive Decline? Misperception and Financial Decision-Making," Journal of Political Economy, University of Chicago Press, vol. 132(6), pages 1793-1830.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/728697
    DOI: 10.1086/728697
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/728697
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/728697
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/728697?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Malavasi, Chiara & Ye, Han, 2024. "Live Longer and Healthier: Impact of Pension Income for Low-Income Retirees," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302374, Verein für Socialpolitik / German Economic Association.
    2. Eunjung Park & Sangyoon Yi, 2025. "Compulsory education enhances financial inclusion across socioeconomic groups: a global analysis," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-14, December.
    3. Jing Li & Kathleen M. McGarry & Lauren Hersch Nicholas & Jonathan S. Skinner, 2026. "Dementia and Long-run Trajectories in Household Finances," NBER Working Papers 34659, National Bureau of Economic Research, Inc.
    4. Gresenz, Carole Roan & Mitchell, Jean M. & Rodriguez, Belicia & Wang, Crystal & Turner, R. Scott & van der Klaauw, Wilbert, 2025. "The financial consequences of undiagnosed memory disorders," Journal of Financial Economics, Elsevier, vol. 172(C).
    5. Hiu Ying Cheung & Yu Qi Fu & Shuo Cheng Xu & Zan Yang, 2025. "Older people’s decisions of the community care: a welfare pluralism perspective," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-9, December.
    6. repec:bon:boncrc:crctr224_2024_514 is not listed on IDEAS

    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:doi:10.1086/728697. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.