Abstract
We investigate how genetic risk of developing Alzheimer's Disease (AD) relates to saving behavior. Using nationally representative data from the 1992-2014 Health and Retirement Study (HRS), we find that genetic predisposition for AD correlates with, but is not causally related to older individuals’ wealth holdings. People with higher Alzheimer’s Disease polygenic risk score (PGS) hold roughly 9 percent more wealth in CDs (hands-off assets) and around 11 percent, 15 percent, and 7 percent less wealth in stocks, IRAs, and other financial assets (hands-on assets) respectively. We explore three hypotheses that could explain these correlations. We hypothesize that people with high risk of AD choose different portfolios: (i) because they know their polygenic risk of developing Alzheimer’s Disease and related dementia, (ii) because they have lower cognitive capacity, and (iii) because the genome-wide association studies (GWAS) process that generated the Alzheimer’s Disease PGS failed to fully account for the aging process. Our extended model results show that the first two hypotheses do not account for the observed correlation. Consistent with the third hypothesis, the interaction between age and the Alzheimer’s Disease PGS does explain the correlation between genetic traits and asset holdings.
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