Cognitive Decline and Changes in Household Composition

• In Event: The Economics of Alzheimer’s Disease: Family Spillovers, Diagnosis, and Financial Consequences

Abstract

Millions of people in the United States are affected by Alzheimer’s disease or a related dementia (ADRD). In addition to directly affecting the 10% of older adults who have an ADRD diagnosis (Alzheimer’s Association 2025), the cognitive decline of one family member can also affect their relatives. For example, previous research has shown the cognitive decline of one member of a couple is associated with worsened financial outcomes for their partner (Gresenz et al. 2025b). Additional research finds that other adverse health shocks can have negative intergenerational effects, for example, some evidence shows that poor child’s health reduces parental earnings and labor supply (for example, Adhvaryu et al. 2023, Breivik and Costa-Ramón 2024, Einav et al. 2025, Eriksen et al. 2021).Two outstanding questions are first, how ADRD affects household composition and second, whether a parent’s cognitive decline affects economic well-being of their children. This paper addresses each of these questions using a novel dataset that links more than 20 years of diagnosis of chronic health conditions from administrative Medicare data with credit reporting data from the Consumer Credit Panel (Gresenz et al. 2025a, 2025b). These combined data sources include health conditions and financial information on more than 300,000 individuals with an ADRD diagnosis and 300,000 age-matched controls who do not have an ADRD diagnosis, as well as measures of financial well-being for their household members, such as credit scores and payment delinquencies. We use these data to examine household composition and residential changes prior to diagnosis as well as financial outcomes of adult children and how they vary with parental co-residence.Our preliminary findings show that changes in household composition around the time of ADRD diagnosis vary depending on baseline household composition. For individuals who already reside with adult children, changes in household composition in the two years around a diagnosis are very similar for those with an ADRD diagnosis to individuals without a diagnosis. In contrast, individuals with an ADRD diagnosis who were previously not living with children become more likely to move in with children in the months or move to nursing homes in the months following an ADRD diagnosis. In ongoing work, we are exploring how these changes in household composition affect financial well-being for new household members. These results will provide new evidence on how the economic consequences of ADRD extend beyond the individual who is affected by the disease, including its effect on other members of the family.

Author

• Krista Ruffini, Georgetown University
  Presenting Author