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

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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