June 2009

IZA DP No. 4269: Cognition and Economic Outcomes in the Health and Retirement Survey

published in: David A. Wise (ed.), Explorations in the Economics of Aging, Chapter 7, University of Chicago Press, pp. 209-236, 2010

Dimensions of cognitive skills are potentially important but often neglected determinants of the central economic outcomes that shape overall well-being over the life course. There exists enormous variation among households in their rates of wealth accumulation, their holdings of financial assets, and the relative risk in their chosen asset portfolios that have proven difficult to explain by conventional demographic factors, the amount of bequests they receive or anticipating giving, and the level of economic resources of the household. These may be cognitively demanding decisions at any age but especially so at older ages. This research examines the association of cognitive skills with wealth, wealth growth, and wealth composition for people in their pre and post-retirement years.