Too old to plan? Age identity and financial planning among the older population of China

• DOI: 10.1016/j.chieco.2022.101770
• Publication Date: 2022-03-12T16:21:16Z
• Authors: Zihan Ye; Xiaopeng Zou; Thomas Post; Weiqiao Mo; Qianqian Yang
• Keywords: WEALTH; Old-age provision; Eldercare arrangement; Consumer Economics: Empirical Analysis; d91 - "Intertemporal Consumer Choice; Life Cycle Models and Saving"; d12 - Consumer Economics: Empirical Analysis; Age identity; SUBJECTIVE AGE; PROPENSITY; VARIABLES; AGING SELF; 0502 economics and business; NONCOGNITIVE ABILITIES; RETIREMENT; Personal Finance; d14 - Personal Finance; Economic behaviors; 05 social sciences; 1. No poverty; SELF-EFFICACY; Financial planning; PORTFOLIO CHOICE; 8. Economic growth; Intertemporal Consumer Choice; Life Cycle Models and Saving; HEALTH

We study how age identity (measured by the difference between chronological age and perceived old age), influences financial planning among the older population (60+) in China. Using data from three waves of the China Longitudinal Aging Social Survey, we show that individuals who feel younger have a significantly higher probability of making financial plans. That such an effect exists in sub-samples divided by age and retirement status implies the relevance of financial planning even for individuals with advanced ages. It is consistent with the hypothesis that old individuals who feel younger have higher perceived cognitive abilities and hence higher motivation to make financial plans. However, an unfavorable perception of social aging culture moderates such a positive effect. Age identity can further impact the downstream economic be-haviors of saving and investing, either directly or indirectly, through financial planning. Finally, a younger age identity also increases an individual's willingness to internalize the responsibility of eldercare. Our findings imply that it is important to consider individuals' age identity when crafting and implementing old-age policies.