Gains and Losses of Household Wealth and Cognitive Functioning in Mid-to-Later Life

• In Event: Implications of Critical Events/Periods Across the Life Course

Abstract

Wealth is a crucial determinant of cognitive health in later life, yet existing research rarely examines how gains and losses in specific asset types differentially affect cognitive functioning across intersecting social positions. Using 22 years of panel data from the Health and Retirement Study (1998-2020) and asymmetric fixed-effects models, this study investigates how change in real and financial assets relate to cognitive functioning among 26,521 adults aged 51 and older, with particular attention to race and gender differences. Results reveal three key findings. First, wealth losses—especially losses of real assets—have substantially larger negative effects on cognitive functioning than comparable gains have positive effects. Second, subgroup analyses show that real-asset losses are more strongly associated with cognitive decline than gains across all race/gender groups except White men. Third, changes in financial assets are significantly associated with cognitive functioning among White men and White women only, but losses and gains do not differ statistically. Together, these findings underscore the importance of asset stability, particularly real-asset stability, for cognitive health and illustrate how structural inequalities produce differential consequences of wealth dynamics in later life.

Authors

• Jessica Lily Warren, University of Washington

• Hyungmin Cha, University of Washington