By Sandra Block
From Kiplinger’s Personal Finance
Carole Roan Gresenz, an economist and professor of public policy and health at Georgetown University, discusses the correlation between Alzheimer’s and finances.
Question: It’s no secret that Alzheimer’s disease affects an individual’s financial-management abilities, but a study you co-authored with economists and medical experts from Georgetown University and the Federal Reserve Bank of New York found that people often make poor financial decisions long before they’re diagnosed with dementia. How did your group reach this conclusion?
Answer: Credit-reporting company Equifax provided us with consumer data that spanned from 2000 to 2017. We merged it with Medicare claims data, which provides information on clinical diagnoses, to determine whether a person was diagnosed with Alzheimer’s and when that occurred. The information was anonymized, which means we were able to analyze the data without accessing individual identifying details of patients.
What was so striking is how clear and consistent the results were. Credit scores began to decline an average of five years prior to an Alzheimer’s diagnosis and continued to decline from then on, falling progressively in the years prior to diagnosis. Delinquent bill payments for both credit cards and mortgages began to increase an average of five years before diagnosis. One year prior to diagnosis, the probability of credit card delinquency was 35 percent higher than it was before the onset of the disease, and the probability of mortgage delinquency was 17 percent higher. This is especially remarkable given that the use of automatic bill payments is relatively common.
Question: What should families take away from the results of your research?
Answer: Don’t wait for an Alzheimer’s diagnosis to start a conversation about finances. It’s important for families and loved ones to be aware that long before symptoms of Alzheimer’s might be recognizable, there could be changes that are quietly affecting an individual’s financial decision-making.
We may be able to help prevent poor financial outcomes by making sure that seniors have a trusted relative or friend they can talk to about their financial lives. Financial institutions also play an important role in detecting and reporting suspected fraud on the elderly. The Consumer Financial Protection Bureau has published an advisory for financial institutions about ways they could help reduce financial exploitation among seniors, for example.
Question: What has been the reaction to your findings?
Answer: I’ve become the steward of so many stories. Almost everyone I speak with has a story about a parent, loved one or friend whose financial behavior changed before they were diagnosed. In some cases, the loved one was subscribing to too many magazines, or getting a driveway repaved even though it didn’t need it or buying the same pair of jeans over and over. This study provides evidence that it’s happening systematically.
We are hoping that we can use the changes we observe in financial outcomes to help predict who might later develop Alzheimer’s. If we can develop an algorithm with good accuracy, it would provide an inexpensive and wide-scale way to identify people who should receive additional testing for Alzheimer’s. We are working on that now.
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