|Title||Cognitive Decline, Limited Awareness, Imperfect Agency, and Financial Well-being|
|Year of Publication||2022|
|Authors||Ameriks, J, Caplin, A, Lee, M, Shapiro, MD, Tonetti, C|
|Series Title||Working Paper|
|Institution||National Bureau of Economic Research|
|Keywords||Cognitive decline, Financial well-being|
Cognitive decline may lead older Americans to make poor financial decisions. Preventing poor decisions may require timely transfer of financial control to a reliable agent. Cognitive decline, however, can develop unnoticed, creating the possibility of suboptimal timing of the transfer of control. This paper presents survey-based evidence that wealthholders regard suboptimal timing of the transfer of control, in particular delay due to unnoticed cognitive decline, as a substantial risk to financial well-being. This paper provides a theoretical framework to model such a lack of awareness and the resulting welfare loss.