Adverse Financial Events Before and After Cognitive Impairment

Tuesday, June 25, 2019: 4:30 PM
Tyler - Mezzanine Level (Marriott Wardman Park Hotel)

Presenter: Lauren Nicholas

Discussant: Donald Taylor

35% of older adults are estimated to have mild cognitive impairment or dementia. Cognitive decline often manifests initially through changes in financial behavior including forgetting to pay bills, uncharacteristically risky financial decisions, and greater susceptibility to fraud and exploitation. In this paper, we develop a new dataset linking the Federal Reserve Consumer Credit Panel to Medicare claims data from 2005 - 2014. We estimate event study models to understand the timing and magnitude of adverse financial events including delinquent credit accounts, tax liens and foreclosure on diagnoses of Alzheimer's Disease and Related Dementia. Use of exact addresses allow us to identify single and couple households, thus all models are estimated at both the individual and household level. Findings have important implications for designing public policies to mitigate the financial risks of cognitive impairment.