Cognition, optimism, and the formation of age‐dependent survival beliefs

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Authors

Grevenbrock, Nils
Groneck, Max
Ludwig, Alexander
Zimper, Alexander

Journal Title

Journal ISSN

Volume Title

Publisher

Wiley

Abstract

This article investigates the roles of psychological biases for deviations between subjective survival beliefs (SSBs) and objective survival probabilities. We model these deviations through age-dependent inverse Sshaped probability weighting functions. Our estimates suggest that implied measures for cognitive weakness increase and relative optimism decrease with age. Direct measures of cognitive weakness and optimism share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of SSBs. Our main finding is that cognitive weakness instead of optimism becomes with age an increasingly important contributor to the well-documented overestimation of survival chances in old age.

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Keywords

Psychological biases, Cognitive weakness, Survival chances, Old age, Subjective survival beliefs (SSBs)

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Citation

Grevenbrock, N., Groneck, M., Ludwig, A. et al. 2021, 'Cognition, optimism, and the formation of age‐dependent survival beliefs', International Economic Review, vol. 62, no. 2, pp. 887-918.