The Impact of Aging on Cognitive Function
by AAII Staff | July 16, 2019
An article by Justin Fox for Bloomberg discussed a study by David Laibson, Sumit Agarwal, John C. Driscoll and Xavier Gabaix that found that cognitive function peaks at age 53 and starts to decrease rapidly, on average, for people in their 70s. The four economists examined the fees and interest rates paid by thousands of borrowers in 10 different types of credit transactions and found that, on average, such costs were minimized at age 53.3.
As more members of the baby-boom generation start moving into their 70s, this data takes on special significance.
The Center for Retirement Research at Boston College has a summary of the study here.
Over the last several years, AAII has covered the area of aging and its impact on investor abilities:
Discussion
Gene from WA posted over 6 years ago:
This left me wondering how they adjusted for those who had paid off loans and credit card debt. Since about my mid-50s, I paid off all loans, mortgages, and credit card debt. Therefore, I no longer need to deal with this. Credit cards, home equity loans, and student debt is based on the bank or company attempting to extract the most income from the user. This may be good capitalism, but it is to the users benefit to avoid paying sky-high interest when they have significant assets. Even at a 7% mortgage, I can't get a guarantee of 7% anywhere in the market so I paid it off when I accumulated the assets. Therefore, I don't have to deal with these "games" they play to extract funds from the customer. So, I wonder if the high knowledge individuals may be out of the market by their retirement (65?) and they keep the gullible and foolish users of credit in the pool from which they drew the data.
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