The higher the risk of developing Alzheimer’s disease, the higher the propensity to invest in lower-risk or higher-liquid assets, according to a recent study.

The researchers primarily used data from the Health and Retirement Study conducted from 1992 to 2014. The study consisted of 8,787 subjects with an average age of 66.44. The study’s subjects varied in education, health, employment, income, planning horizon, risk aversion and number of living children. Additionally, the study gathered data on their asset holdings, including stocks, cash and equivalents, IRAs [individual retirement account(s)], certificates of deposit (CDs), bonds and other financial assets.

Initially the researchers identified three hypotheses meant to discover why individuals with different Alzheimer’s risk levels save and allocate wealth in different ways. The first hypothesis was that the subjects know their risk of developing Alzheimer’s disease or related dementia (ADRD); the second hypothesis was that the subjects “have different levels of cognitive capacity”; and the third hypothesis was that the process used to produce the Alzheimer’s risk score doesn’t fully account for the aging process. The authors discovered that the first and second hypotheses were inconclusive and did not explain the association between saving and Alzheimer’s.

However, the third hypothesis—the fact that people foresee that they “may grow forgetful or incapable of managing their assets”—held up. The results showed that individuals might recognize their risk for developing ADRD with “more precision” as they age. The results also showed that if “doctors would use genetic tests to inform [subjects] whether they face a higher risk of developing ADRD later in life,” then the savings behavior may be adjusted.

Source: “Understanding the Correlation Between Alzheimer’s Disease Polygenic Risk, Wealth, and the Composition of Wealth Holdings,” by Su H. Shin, Dean R. Lillard and Jay Bhattacharya; National Bureau of Economic Research Working Paper, February 2019.

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