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Cognition and Economic Outcomes in the Health and Retirement Survey

Cognition and Economic Outcomes in the Health and Retirement Survey

Chapter:
(p.209) 7 Cognition and Economic Outcomes in the Health and Retirement Survey
Source:
Explorations in the Economics of Aging
Author(s):
John J. McArdle, James P. Smith, Robert Willis
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226903385.003.0008

This chapter looks at the aspect of the socioeconomic status (SES) called health dynamic, focusing on cognitive skills as potentially influencing economic well-being over the life course. The growing participation and saving in 401(k) plans may have created an increased impact on cognition, as individuals must decide for themselves how much to contribute to the plans, and how to invest their accumulated savings among the options available in the plan. The chapter finds that “numeracy,” is by far the most predictive of wealth among all cognitive variables in the Health and Retirement Study (HRS) sample. The association between numeracy and wealth holds for both the financial and nonfinancial respondents, but the magnitude of the estimated impact is much higher for the financial respondent.

Keywords:   cognitive skills, retirement, health, retirement, National Growth and Change Study, 401(k) plan, economic well-being

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