The age of reason
financial decisions over the lifecycle
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Author
Contributions
- Massachusetts Institute of Technology. Dept. of Economics - Contributor
Publication
2007 - Massachusetts Institute of Technology, Dept. of Economics, Cambridge, MA, Massachusetts
Language
English
Word Count
10,750 words, Guess
Page Count
43 pages
Identifiers
- Internet Archiveageofreasonfinan00agar
- OCLC Control Number137298876
- Open LibraryOL24643000M
Description
The sophistication of financial decisions varies with age: middle-aged adults borrow at lower interest rates and pay fewer fees compared to both younger and older adults. We document this pattern in ten financial markets. The measured effects can not be explained by observed risk characteristics. The sophistication of financial choices peaks at about age 53 in our cross-sectional data. Our results are consistent with the hypothesis that financial sophistication rises and then falls with age, although the patterns that we observe represent a mix of age effects and cohort effects. Keywords: Household finance, behavioral finance, behavioral industrial organization, aging, shrouding, auto loans, credit cards, fees, home equity, mortgages. JEL Classifications: D1, D4, D8, G2, J14.
Subjects
Series Statement
- Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 07-11
- Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 07-11.
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