We investigate whether older adults are aware of their cognitive decline and the potential financial consequences of poor vision. First, we show that older people tend to underestimate their cognitive decline. We then show that those who experience a major downturn but do not realize it are at risk of losing wealth. This loss reflects the decline in financial wealth and is mainly experienced by wealthy people who have been active in the stock market. Our findings support the hypothesis that financial losses among older people who are unaware of their cognitive decline are the result of poor financial decisions, not rational investment strategies.
That comes from a recently published JPE paper by Fabrizio Mazzonna and Franco Peracchi. Here are some paper versions without a small gate.
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