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The Effects of the Financial Crisis on the Well-Being of Older Americans: Evidence from the Cognitive Economics Study

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  • Matthew D. Shapiro

    (University of Michigan and NBER)

Abstract

This paper uses the Cognitive Economics Study (CogEcon) to assess the effect of the financial crisis on the well-being of older Americans. Financial wealth fell by about 15 percent for the median household. These financial losses were concentrated among households with high levels of wealth and high cognitive capacities, who tend to have higher exposure to the stock market. Nonetheless, households with little financial wealth suffered declines in well-being-measured by declines in consumption-as large on average as households with substantial exposure to the stock market. Tight credit market conditions and adverse labor market outcomes account for much of the effect of the financial crisis on the consumption of these low-wealth households.

Suggested Citation

  • Matthew D. Shapiro, 2010. "The Effects of the Financial Crisis on the Well-Being of Older Americans: Evidence from the Cognitive Economics Study," Working Papers wp228, University of Michigan, Michigan Retirement Research Center.
    • Handle: RePEc:mrr:papers:wp228
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alberto Montagnoli & Mirko Moro, 2014. "Everybody Hurts: Banking Crises and Individual Wellbeing," Working Papers 2014010, The University of Sheffield, Department of Economics.
    2. Angus Deaton, 2012. "The financial crisis and the well-being of Americans," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 1-26, January.
    3. Alberto Montagnoli & Mirko Moro, 2018. "The Cost of Banking Crises: New Evidence from Life Satisfaction Data," Kyklos, Wiley Blackwell, vol. 71(2), pages 279-309, May.
    4. Adi Pierewan & Gindo Tampubolon, 2014. "Internet Use and Well-Being Before and During the Crisis in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 119(2), pages 647-662, November.
    5. Dimitris Christelis & Dimitris Georgarakos & Tullio Jappelli & Maarten van Rooij, 2020. "Consumption Uncertainty and Precautionary Saving," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 148-161, March.
    6. Antje Mertens & Miriam Beblo, 2016. "Self-Reported Satisfaction and the Economic Crisis of 2007–2010: Or How People in the UK and Germany Perceive a Severe Cyclical Downturn," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(2), pages 537-565, January.
    7. Chai, Jingjing & Maurer, Raimond H. & Mitchell, Olivia S. & Rogalla, Ralph, 2011. "Lifecycle impacts of the financial and economic crisis on household optimal consumption, portfolio choice, and labor supply," CFS Working Paper Series 2011/23, Center for Financial Studies (CFS).
    8. Thomas Hyclak & Chad Meyerhoefer & Larry Taylor, 2015. "Older Americans’ health and the Great Recession," Review of Economics of the Household, Springer, vol. 13(2), pages 413-436, June.
    9. Christelis, Dimitris & Georgarakos, Dimitris & Jappelli, Tullio, 2015. "Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 21-41.
    10. Acharya, Viral & Mora, Nada, 2011. "Are Banks Passive Liquidity Backstops? Deposit Rates and Flows during the 2007-2009 Crisis," CEPR Discussion Papers 8706, C.E.P.R. Discussion Papers.
    11. Tonzer, Lena, 2017. "Uncertainty, financial crises, and subjective well-being," IWH Discussion Papers 2/2017, Halle Institute for Economic Research (IWH).
    12. Eric French & Taylor Kelley & An Qi, 2013. "Expected income growth and the Great Recession," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 37(Q I), pages 14-29.
    13. Schneider, William & Waldfogel, Jane & Brooks-Gunn, Jeanne, 2017. "The Great Recession and risk for child abuse and neglect," Children and Youth Services Review, Elsevier, vol. 72(C), pages 71-81.
    14. repec:fip:fedhep:y:2013:i:qi:p:14-29:n:vol.37no.1 is not listed on IDEAS
    15. Purvi Sevak & Lucie Schmidt & Onur Altindag, 2012. "The Great Recession, Older Workers with Disabilities, and Implications for Retirement Security," Working Papers wp277, University of Michigan, Michigan Retirement Research Center.
    16. Tonzer Lena, 2019. "Elevated Uncertainty during the Financial Crisis: Do Effects on Subjective Well-Being Differ across European Countries?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-15, April.

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