Working Paper: NBER ID: w15266
Authors: John J. McArdle; James P. Smith; Robert Willis
Abstract: 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.
Keywords: Cognitive Skills; Economic Outcomes; Wealth Accumulation; Health and Retirement Survey
JEL Codes: J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improved numeracy (C60) | Increase in total household wealth (G59) |
| Improved numeracy (C60) | Larger fraction of financial wealth held in stocks (G19) |
| Improved episodic memory (Y60) | Higher levels of household wealth (G59) |
| Improved episodic memory (Y60) | Higher levels of financial wealth (G59) |