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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26291
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| Title: | The Age of Reason: Financial Decisions Over the Lifecycle |
| Authors: | Agarwal, Sumit
John C., Driscoll
Xavier, Gabaix
Laibson, David |
| Keywords: | Household finance
behavioral finance
behavioral industrial organization
aging
shrouding
auto loans
credit cards
fees
home equity
home equity |
| Issue Date: | 7-Jun-2007 |
| Series/Report no.: | FIN-07-005 |
| Abstract: | 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 cannot be explained by observed risk
characteristics. The sophistication of financial choices peaks around
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. |
| URI: | http://hdl.handle.net/2451/26291 |
| Appears in Collections: | Finance Working Papers
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