Aging and Financial Decision Making

Management Science, 2015, 61(11), 2603-2610

23 Pages Posted: 22 Oct 2012 Last revised: 17 Nov 2015

Keith Jacks Gamble

DePaul University - Department of Finance

Patricia Boyle

Rush University - Rush University Medical Center

Lei Yu

Rush University

David Alan Bennett

Rush University - Rush University Medical Center

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2014

Abstract

This study examines how cognitive changes associated with aging impact the financial decision making capability of older Americans. We find that a decrease in cognition is associated with a decrease in financial literacy. Decreases in episodic memory and visuospatial ability are associated with a decrease in numeracy, and a decrease in semantic memory is associated with a decrease in financial knowledge. A decrease in cognition also predicts a drop in self-confidence in general, but importantly, it is not associated with a drop in confidence in managing one's own finances. Participants experiencing decreases in cognition do show an increased likelihood of getting help with financial decisions; however, many participants experiencing significant drops in cognition still do not get help.

Keywords: aging, cognitive decline, financial literacy, retirement

JEL Classification: G00, H31

Suggested Citation

Gamble, Keith Jacks and Boyle, Patricia and Yu, Lei and Bennett, David Alan, Aging and Financial Decision Making (June 1, 2014). Management Science, 2015, 61(11), 2603-2610. Available at SSRN: https://ssrn.com/abstract=2165564 or http://dx.doi.org/10.2139/ssrn.2165564

Keith Jacks Gamble (Contact Author)

DePaul University - Department of Finance ( email )

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States

Patricia Boyle

Rush University - Rush University Medical Center ( email )

Health Systems Management
1700 West Van Buren Street, TOB Suite 126B
Chicago, IL
United States

Lei Yu

Rush University ( email )

Chicago, IL
United States

David Alan Bennett

Rush University - Rush University Medical Center ( email )

Health Systems Management
1700 West Van Buren Street, TOB Suite 126B
Chicago, IL
United States

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