We examine whether or not older individuals appropriately understand their cognitive decline and the potential monetary penalties of misperception. First, we present that older individuals are likely to underestimate their cognitive decline. We then present that these experiencing a extreme decline however unaware of it usually tend to endure wealth losses. These losses largely replicate decreases in monetary wealth and are primarily skilled by wealthier individuals who have been beforehand lively on the inventory market. Our findings assist the view that monetary losses amongst older individuals unaware of their cognitive decline are the results of dangerous monetary choices, not of rational disinvestment methods.
That’s from a newly published JPE paper by Fabrizio Mazzonna and Franco Peracchi. Listed below are some less gated versions of the paper.