Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs

55 Pages Posted: 20 Feb 2018 Last revised: 27 Mar 2020

See all articles by Nils Grevenbrock

Nils Grevenbrock

Goethe University Frankfurt - Research Center SAFE

Max Groneck

Stockholm School of Economics, Department of Economics

Alexander Ludwig

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA); Goethe University Frankfurt

Alexander Zimper

University of Pretoria; Kiel Institute for the World Economy

Multiple version iconThere are 4 versions of this paper

Date Written: March 24, 2020

Abstract

This paper investigates the roles psychological biases play in deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cognitive weakness and relative pessimism increase with age. We document that direct measures of cognitive weakness and motivational attitudes share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of subjective survival beliefs: cognitive weakness rather than optimism is an increasingly important contributor to overestimation of survival chances in old age.

Keywords: Subjective Survival Beliefs, Probability Weighting Function, Con

JEL Classification: D83, D91, I10

Suggested Citation

Grevenbrock, Nils and Groneck, Max and Ludwig, Alexander and Zimper, Alexander, Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (March 24, 2020). SAFE Working Paper No. 200, Available at SSRN: https://ssrn.com/abstract=3124791 or http://dx.doi.org/10.2139/ssrn.3124791

Nils Grevenbrock

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Max Groneck

Stockholm School of Economics, Department of Economics ( email )

Germany

HOME PAGE: http://https://www.hhs.se/en/Research/Departments/DE/

Alexander Ludwig (Contact Author)

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Alexander Zimper

University of Pretoria ( email )

South Africa

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

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