Negative Wealth Shocks in Mid-to-Later Life and Cognitive Aging

Major financial losses may cause adverse health consequences, increase stress, and decrease material living standards, all of which may contribute to a lower level of cognitive function.1–3 Negative wealth shocks, defined as a loss of 75% or higher in equivalized household wealth over a short time period, can occur due to individual-level stressful life events (e.g., divorce4 and development of mental5 and cognitive illnesses6 ), regional natural disasters,7 economic crises (e.g., the Great Recession8 ), or disease outbreaks (e.g., COVID-199 ). They have been correlated with later-life physical markers of stress10 and shorter life expectancy11 in later adulthood. Individual-level risk factors, such as adverse changes in marital and health status, in relation to a negative wealth shock remain understudied. 12,13 Further, negative wealth shocks and cognitive aging outcomes have a bidirectional relationship. Cognitive impairment may result in a reduced capacity for financial decision-making,14 which could further deteriorate cognitive function. 15 Therefore, the nature of the causal relationship between negative wealth shocks and subsequent cognitive outcomes is unclear, limiting the design of effective interventions to protect the cognitive health of financially vulnerable older adults. Moreover, there is a lack of comparative studies on the relationship between later-life negative wealth shocks and cognitive outcomes across high- and upper-middle-income countries, which would help broaden the evidence base on the consistency of this association across populations with different economic systems. 16 The relationship may arguably vary as aging and facing life transitions, e.g., retirement. As adults enter retirement, they may have fewer chances to retrieve financial resources, which are critical to retirement,17 from any loss. This dissertation aims to provide new evidence on three significant topics related to understanding the role of negative wealth shocks in cognitive aging outcomes in mid-to-later life. First, it aims to investigate marital and health transitions as putative individual-level risk factors for a negative wealth shock in the US. Second, it aims to elucidate the adverse effect of a negative wealth shock on ongoing aging-related memory declines before and after the wealth shock in the US. Third, it aims to assess the potential modifying effect of differing social and economic contexts on the association of negative wealth shocks with lower levels of cognitive function.
Results suggest that the individual-level risk factors (adverse changes in marital and health status) were respectively associated with a greater likelihood of experiencing a subsequent negative wealth shock in later adulthood in the US. Additionally, there existed a bidirectional relationship between the experience of a negative wealth shock and the rate of memory aging in the US: compared to those who did not experience a negative wealth shock, middle-aged and older adults who did experience a negative wealth shock had faster rates of memory decline prewealth shock, and an immediate drop in memory function post-wealth shock. Furthermore, the experience of a negative wealth shock in later-life was associated with a lower level of subsequent cognitive function in China and the US, but not in England or Mexico. This dissertation would provide evidence that may suggest directions for future policy interventions targeting the onset of, risk factors for, and cognitive consequences of a negative wealth shock at the population and individual levels, to protect vulnerable older adults against the risk of cognitive impairment and dementia arising from drastic financial losses to support healthy aging.