Mental Retirement

26 Pages Posted: 21 Nov 2009

See all articles by Susann Rohwedder

Susann Rohwedder

RAND Corporation

Robert J. Willis

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2009

Abstract

Some studies suggest that people can maintain their cognitive abilities through “mental exercise.” This has not been unequivocally proven. Retirement is associated with a large change in a person’s daily routine and environment. In this paper, we propose two mechanisms how retirement may lead to cognitive decline. For many people retirement leads to a less stimulating daily environment. In addition, the prospect of retirement reduces the incentive to engage in mentally stimulating activities on the job. We investigate the effect of retirement on cognition empirically using cross-nationally comparable surveys of older persons in the United States, England, and 11 European countries in 2004. We find that early retirement has a significant negative impact on the cognitive ability of people in their early 60s that is both quantitatively important and causal. Identification is achieved using national pension policies as instruments for endogenous retirement.

Keywords: Cognition, retirement, human capital, international comparison, HRS, SHARE, ELSA

JEL Classification: I12 J24, J26

Suggested Citation

Rohwedder, Susann and Willis, Robert J., Mental Retirement (October 1, 2009). Netspar Discussion Paper No.10/2009-037 . Available at SSRN: https://ssrn.com/abstract=1509328 or http://dx.doi.org/10.2139/ssrn.1509328

Susann Rohwedder (Contact Author)

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

Robert J. Willis

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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