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Effects of crisis: Heterogeneity in impacts Heterogeneity of capacity for absorbing impacts

Cognition, Financial Wealth, and the Effects of the Financial Crisis on the Well-Being of Older Americans Matthew D. Shapiro. Effects of crisis: Heterogeneity in impacts Heterogeneity of capacity for absorbing impacts. Heterogeneity: in impacts Financial asset gains and losses

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Effects of crisis: Heterogeneity in impacts Heterogeneity of capacity for absorbing impacts

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  1. Cognition, Financial Wealth, and the Effects of the Financial Crisison the Well-Being of Older AmericansMatthew D. Shapiro

  2. Effects of crisis: • Heterogeneity in impacts • Heterogeneity of capacity for absorbing impacts

  3. Heterogeneity: in impacts • Financial asset gains and losses • Housing equity • Labor market • Credit markets

  4. Heterogeneity: capacity for absorbing impacts Level of assets Ability to adjust labor and saving (time to retirement) Cognitive capacity

  5. CogEcon Survey Design CogUSA sample Purpose: Improve/test cognitive measures Target population matches HRS CogEcon Economic data linked to cognitive measures Panel

  6. CogEcon Survey Distinct combination of covariates Wealth, portfolio composition, change in value Risk preference Cognition: In person and telephone follow-up Financial distress Effects of crisis: Labor supply Consumption

  7. CogEcon Survey • Timing • CogEcon 2008: Pre-crash baseline • CogEcon 2009 Post-crash

  8. Timing of CogEcon versus Dow Jones CogEcon Wave 2 CogEcon Wave 1

  9. Financial Wealth and the Financial Crisis Source: CogEcon 2009 post-crash. Household data based on financial respondent. Fluid intelligence is measured by number score. Figures for financial wealth exclude those with wealth <$10,000.

  10. Financial Wealth and the Financial Crisis Source: CogEcon 2009 post-crash. Household data based on financial respondent. Fluid intelligence is measured by number score. Figures for financial wealth exclude those with wealth <$10,000.

  11. Financial Wealth and the Financial Crisis Source: CogEcon 2009 post-crash. Household data based on financial respondent. Fluid intelligence is measured by number score. Figures for financial wealth exclude those with wealth <$10,000.

  12. House Value and the Financial Crisis Source: CogEcon 2009 post-crash.

  13. Financial Distress Indicators

  14. Labor Market Status, Outcomes, and Adjustments

  15. Change in Consumption as a Result of the Financial Crisis

  16. Summary of regression results • Housing and wealth losses explain consumption declines • Elasticity about 10% • Financial distress strongly indicates consumption decline • High financial recession doubles consumption decline • Cognitive factors remain important

  17. Note: Dependent variable is percent change in consumption; Includes other covariates (not tabulated)

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