The Age of Reason: Financial Decisions Over the Lifecycle

51 Pages Posted: 3 Jul 2007 Last revised: 19 Jul 2010

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

John C. Driscoll

Federal Reserve Board

Xavier Gabaix

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

David Laibson

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: June 2007

Abstract

In cross-sectional data sets from ten credit markets, we find that middle-aged adults borrow at lower interest rates and pay fewer fees relative to younger and older adults. Fee and interest payments are minimized around age 53. The measured effects are not explained by observed risk characteristics. We discuss several leading factors that may contribute to these effects, including age-related changes in experience and cognitive function, selection effects, and cohort effects.

Suggested Citation

Agarwal, Sumit and Driscoll, John C. and Gabaix, Xavier and Laibson, David I., The Age of Reason: Financial Decisions Over the Lifecycle (June 2007). NBER Working Paper No. w13191. Available at SSRN: https://ssrn.com/abstract=997547

Sumit Agarwal

National University of Singapore ( email )

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HOME PAGE: http://www.ushakrisna.com

John C. Driscoll

Federal Reserve Board ( email )

20th and C Streets, NW
Washington, DC 20551
United States

HOME PAGE: http://www.federalreserve.gov/econresdata/john-c-driscoll.htm

Xavier Gabaix (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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European Corporate Governance Institute (ECGI)

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David I. Laibson

Harvard University - Department of Economics ( email )

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United States
617-496-3402 (Phone)
617-495-8570 (Fax)

National Bureau of Economic Research (NBER) ( email )

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