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Are Older People Aware of Their Cognitive Decline? Misperception and Financial Decision-Making
Resource type
Authors/contributors
- Mazzonna, Fabrizio (Author)
- Peracchi, Franco (Author)
Title
Are Older People Aware of Their Cognitive Decline? Misperception and Financial Decision-Making
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.
Publication
Journal of Political Economy
Volume
132
Issue
6
Pages
1793-1830
Date
2024-06-01
DOI
ISSN
0022-3808
Accessed
2024-06-27
Extra
Publisher: The University of Chicago Press
Citation
Mazzonna, F., & Peracchi, F. (2024). Are Older People Aware of Their Cognitive Decline? Misperception and Financial Decision-Making. Journal of Political Economy, 132, 1793–1830.
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