A good way to improve the negative effects of retirement is to stay involved in social activities.
October 30, 2020 5 min read
This story originally appeared on The Conversation
By Plamen Nikolov , Binghamton University, State University of New York
To establish that finding, we examined the effects of a rural pension program that China introduced in 2009 that provided participating individuals with a stable income if they stopped working after the official retirement age of 60. We found that people who participated in the program and retired within one to two years experienced cognitive decline equivalent to a 1.7% drop in general intelligence relative to the general population. This drop equals about three IQ points and could make it difficult for someone to stick to a medication schedule or do financial planning .
The biggest negative effect occurred in what is called “delayed recall,” which measures a person’s ability to recall something mentioned several minutes before. Neurological research links problems in this area with the early onset of dementia .
Advantages and disadvantages
Cognitive decline refers to when a person has trouble remembering, learning new things, concentrating, or making decisions that affect their daily life. Although some cognitive decline appears to be an inevitable by-product of aging, more rapid decline can have profound adverse consequences in life.
A better understanding of the causes of this has powerful financial consequences. Cognitive skills, the mental processes of gathering and processing information to solve problems, adapt to situations, and learn from experiences, are crucial for decision-making. They influence an individual’s ability to process information and are related to higher income and a better quality of life .
Retiring early and working less or not at all can pay off big, like reduced stress, better diets, and more sleep. But as we found out, it also has unwanted adverse effects, such as less social activity and less time spent challenging the mind, that far outweighed the positives.
While retirement schemes around the world are generally introduced to ensure the well-being of older adults , our research suggests that they must be carefully designed to avoid significant and unintended adverse consequences. When people consider retirement, they must weigh the benefits against the significant disadvantages of a sudden lack of mental activity. A good way to enhance these effects is to stay involved in social activities and continue to use your brain in the same way that you did when you were working.
In short, we show you that if you rest, you rust.
Because we are using data and a program in China, the mechanisms for how retirement induces cognitive decline could be context-specific and do not necessarily apply to people in other countries. For example, cultural differences or other policies that can support older people are able to buffer some of the negative effects that we see in rural areas of China, due to increased social isolation and reduced mental activities.
Therefore, we cannot definitively say that the findings are extrapolated to other countries. We look at data from retirement programs in other countries, such as India, to see if the effects are similar or how they differ.
A major focus of the economics research lab I lead is to better understand the causes and consequences of changes in what economists call ” human capital, ” especially cognitive skills, in the context of developing countries.
Our lab’s mission is to generate research to inform economic policy and empower people in low-income countries to lift themselves out of poverty. One of the main ways we do this is by using randomized controlled trials to measure the impact of a particular intervention, such as early retirement or access to microcredit, on educational outcomes, productivity, and health decisions.
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