Events at CERGE-EI

Fabrizio Mazzonna, Ph.D.

Università della Svizzera Italiana (USI), Lugano, Switzerland

Abstract: In many developed economies, older individuals are increasingly required to make complex financial, health, and long-term care decisions. However, aging and cognitive decline might negatively affect their decision-making process. For this reason, it is particularly important to understand whether people recognize their own cognitive decline and how they react. In this paper, we investigate whether people perceive their own cognitive decline and the potential financial consequences of a misperception. Using longitudinal data from US and European old-age surveys (HRS and SHARE), we first examine the relationship between self-ratings of memory ability and assessed memory performances showing that older people tend to underestimate their own cognitive decline.  Then we show that individuals who experienced a significant cognitive decline across waves are more likely to experience a financial loss if they rate their memory performances stable or still good.

The seminar is co-financed by the European Union.

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