Title | Cognitive Decline, Limited Awareness, Imperfect Agency, and Financial Well-being |
Publication Type | Report |
Year of Publication | 2022 |
Authors | Ameriks, J, Caplin, A, Lee, M, Shapiro, MD, Tonetti, C |
Series Title | Working Paper |
Document Number | 29634 |
Institution | National Bureau of Economic Research |
City | Cambridge, MA |
Keywords | Cognitive decline, Financial well-being |
Abstract | 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. |
DOI | 10.3386/w29634 |
Citation Key | 12519 |