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Cited by 832

The DOI matches its Crossref record; 8 of the 8 references it cites were found in a registry or an index.

The Age of Reason: Financial Decisions over the Life Cycle and Implications for Regulation

Open access
Agarwal, Sumit, Driscoll, John C., Gabaix, Xavier, Laibson, David·2009·Brookings Papers on Economic Activity
DOI 10.1353/eca.0.0067
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Abstract

Many consumers make poor financial choices, and older adults are particularly vulnerable to such errors. About half of the population between ages 80 and 89 have a medical diagnosis of substantial cognitive impairment. We study life-cycle patterns in financial mistakes using a proprietary database with information on 10 types of credit transactions. Financial mistakes include suboptimal use of credit card balance transfer offers and excess interest rate and fee payments. In a cross section of prime borrowers, middle-aged adults made fewer financial mistakes than either younger or older adults. We conclude that financial mistakes follow a U-shaped pattern, with the cost-minimizing performance occurring around age 53. We analyze nine regulatory strategies that may help individuals avoid financial mistakes. We discuss laissez-faire, disclosure, nudges, financial "driver's licenses," advance directives, fiduciaries, asset safe harbors, and ex post and ex ante regulatory oversight. Finally, we pose seven questions for future research on cognitive limitations and associated policy responses.

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Metadata

Authors
Agarwal, S., Driscoll, J. C., Gabaix, X., & Laibson, D.
Venue
Brookings Papers on Economic Activity
Publisher
Project MUSE
Published
2009-09
Volume
2009
Issue
2
Pages
51-117
ISSN
  • 0007-2303 (ISSN-L)
  • 1533-4465
DOI
10.1353/eca.0.0067
OpenAlex
W3126071966
Cited by
832
References
8
FWCI
123.24
Type
journal article
Language
en
Open access
green

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CoChat. (2026). Citation check: The Age of Reason: Financial Decisions over the Life Cycle and Implications for Regulation. https://app.cochat.ai/papers/10.1353/eca.0.0067
The paper
Agarwal, S., Driscoll, J. C., Gabaix, X., & Laibson, D. (2009). The Age of Reason: Financial Decisions over the Life Cycle and Implications for Regulation. Brookings Papers on Economic Activity. https://doi.org/10.1353/eca.0.0067

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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.