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

62 Pages Posted: 20 Feb 2018 Last revised: 23 Jul 2018

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

Goethe University Frankfurt - Research Center SAFE; University of Cologne - Faculty of Management, Economics and Social Sciences

Alexander Zimper

University of Pretoria; Kiel Institute for the World Economy

Multiple version iconThere are 3 versions of this paper

Date Written: June 2

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 con_rm 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 rmatory Bias, Cognition, Optimism, Pessimism

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 (June 2). 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)

Goethe University Frankfurt - Research Center SAFE ( email )

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

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Albertus-Magnus-Platz
Cologne, D-50923
Germany

HOME PAGE: http://www.wiso.uni-koeln.de/cmr/alexludwig

Alexander Zimper

University of Pretoria ( email )

South Africa

Kiel Institute for the World Economy ( email )

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

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